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The American
Cancer Society does not offer legal advice. This information is
intended to provide general background in this area of the law.
COBRA stands for the Consolidated
Omnibus Budget Reconciliation Act, which became law in
1986. COBRA gives you the right to choose to temporarily keep the group
health insurance benefits that you would otherwise lose after you
reduce your working hours, quit your job, or lose your job. It also
lets family members choose to keep health insurance after your job loss
or other qualifying event that would normally cause them to lose the
coverage they have through your employer. (See the section, "What is a
qualifying event under COBRA?") COBRA applies to nearly all
employers with 20 or more employees.
Before this law went into effect, when employees left their
companies, they and any covered family members lost their health
insurance immediately. If the employee or a family member were ill,
they were often not able to get new health insurance because they were
already sick. COBRA allows an employee to buy health insurance through
the employer even though the person no longer works there or no longer
works full time.
Extra help for some people came through with the economic
stimulus package signed into law February 17, 2009 (known as the
American Recovery and Reinvestment Act of 2009). It pays part of the
COBRA premium for people who lost their jobs, but only if they meet
certain requirements. See the section below, "Can I get
extra help if I lost my job between September 1, 2008 and December 31,
2009?" for more details.
How long does the COBRA coverage last?
The length of time you can keep COBRA coverage depends on your
qualifying event (see below). If your major medical coverage ends
because your employment ends (other than for gross misconduct), or
because your hours are reduced, you and your qualified dependents are
allowed to keep coverage under the employer's health insurance for up
to 18 months by paying for the full cost of their coverage.
Also, under the Health Insurance Portability and
Accountability Act of 1996, certain people with a disability are
allowed to qualify for 29 months (the original 18 months plus an
11-month extension) of COBRA continuation coverage. To qualify for this
disability extension, the person must get a formal disability
determination from the Social Security Administration (SSA) that shows
they were disabled at the time (or within 60 days) of their COBRA
qualifying event. This means that the person must apply for disability
through the SSA and wait for their decision (determination) about
whether or not he or she is disabled. After getting the SSA decision,
the employee must send a copy of the letter to the health plan
administrator within 60 days of receiving the letter and before the 18
months of coverage ends.
Lastly, dependents who lose job-based coverage due to a change
in the family (such as divorce or other qualifying event) can still get
COBRA coverage for up to 36 months. (See the section below, "What is a
qualifying event under COBRA?") People with COBRA coverage
have the same health benefits and rights as active employees. For
example, they can change plan options during open enrollment periods
and parents can add newborns and newly adopted children to their COBRA
policies.
What
is a "qualifying event" under COBRA?
A qualifying event is what makes employees or their dependents
eligible for COBRA coverage.
Qualifying events for the employee
Qualifying events for the employee include loss of health
insurance for any of the following reasons:
- termination of employment (employee quits job, is laid off,
or fired for anything other than gross misconduct)
- reduction in work hours (for reasons other than gross
misconduct)
Qualifying events for the spouse or
dependents of the employee
Qualifying events for the spouse or dependents of the employee
who had been included on employee’s health plan include:
- the insured employee's death
- divorce or legal separation from the insured employee
- loss of dependent status (as defined by the insurance
plan's rules)
- employee becomes entitled to Medicare and the employer
takes him or her off the health insurance plan
- any event in the list above that causes the employee to
lose health coverage
The employee's qualified spouse or children may enroll in
COBRA even if the employee does not.
What is a "qualifying event notice" under
COBRA?
Before a group health plan must offer COBRA coverage, the
group health plan administrator must be notified of the qualifying
event. The employer has 30 days after the event happens to notify the
plan if the qualifying event is any of the following:
- employee job loss
- reduced hours of the employee
- employee death
- Medicare eligibility of the employee
- employer files for Chapter 11 bankruptcy
The employee or dependent must notify the group health plan
administrator within 60 days of family changes:
- divorce
- legal separation
- child's loss of dependent status
How to go about doing this should be outlined in the summary
plan description (SPD) you get from your employer when you enroll in a
health plan. If your employer does not have a reasonable procedure for
notifying the health plan, you can give notice by contacting the person
or unit that handles your employee benefits.
What is an "election notice"?
Within 14 days of getting the qualifying event notice (above),
the employer or health plan administrator must give the person who is
about to lose health insurance written notice of his or her COBRA
rights. The election notice should contain all of the information you
will need to understand COBRA coverage so that you can make an informed
decision on whether or not to continue coverage. It should also give
you the name of the person who handles COBRA for the health plan (the
COBRA administrator) and tell you how to get more information.
What do I do once I get the COBRA election
notice?
The employee or qualified dependents have 60 days after they
get the election notice to choose health insurance coverage for
themselves under COBRA. The employee or dependent must notify the COBRA
administrator listed on their COBRA election notice in writing if they
wish to keep their health insurance. The COBRA administrator is the
person who keeps up with COBRA continuation benefits for the employer.
How long do I have before I must pay the
first COBRA premium?
The beneficiary has 45 days from the date he or she chooses to
continue health insurance coverage to pay the first premium bill. That
payment generally must cover the period of coverage from the date COBRA
was chosen all the way back to the date of the loss of coverage due to
the qualifying event. Neither the health plan administrator nor the
employer is required to send you monthly premium notices or "bills," so
make sure you pay attention to due dates.
How much does COBRA cost?
The premium for COBRA coverage is equal to the full cost of
your group health coverage -- including the employer and employee share
-- plus up to 2% more for administrative costs. This is usually much
more than the employee paid when he or she worked for the company,
since the company then probably paid for part of the premium. But it
still usually costs less than buying individual health coverage. Some
employers may give the option of dropping out of "non-traditional"
insurance plans, such as dental and vision coverage, in order to reduce
costs.
If you have already had the 18 month standard COBRA coverage
and have started on the 11-month disability extension, the premium may
be much higher. In this situation, the employer may charge up to 150%
of the actual insurance cost.
Can I
get extra help if I lost my job between September 1, 2008 and December
31, 2009?
You may qualify for short-term help paying for COBRA through
the American Recovery and Reinvestment Act of 2009 if you lost your job
between September 1, 2008 and December 31, 2009. (Those who resigned or
quit their jobs, even for medical reasons, do not qualify.)
Your former employer must notify you that you are eligible for
COBRA and tell you that you may be able to keep your insurance while
paying only 35% of your COBRA premiums for a limited time. The federal
government pays your employer the other 65%. You cannot get this help
if you will make $125,000 or more in the tax year that you want help,
nor can you get it if your jointly-filed taxable amount will be
$250,000 or more in that year. (The income limits used are the modified
adjusted gross income.) This help can last for up to 9 months, or less
if you can get new health insurance coverage. You must notify your
employer if you become eligible for new employer-sponsored health
coverage or Medicare. Talk to your employer for more information.
If you meet the requirements for the federal help and have
been paying the full COBRA amount since your job loss, you should be
able to get 65% of your money back. Your employer may credit that
amount toward future COBRA payments, or refund it to you outright. Talk
to your employer for details.
If you lost your job after September 1, 2008 and declined
COBRA, you should get a second chance for coverage in March 2009. If
you meet the requirements for this help, you can start COBRA coverage
while paying only 35% of the premium for up to 9 months. Get in touch
with your former employer for more information.
How long do I need to have a job in order to
be covered under COBRA?
You are eligible for COBRA coverage if you were covered under
the group health plan on the day before your qualifying event. This
1-day rule also applies to your spouse and dependents who were covered
under the plan.
Under what conditions is COBRA discontinued?
COBRA coverage is discontinued under the following
circumstances:
- The covered person becomes covered under another group plan
or becomes eligible under Medicare. If the new plan has a waiting
period for pre-existing conditions, you may choose to have coverage
under COBRA along with the new plan.
- The covered person does not pay the premiums for the
continued coverage. There is a 30-day grace period to pay premiums, but
your coverage may be put on hold for late payments. For example, if you
do not pay a premium by the first day of a period of coverage, the plan
may cancel your coverage. But if you pay before the grace period ends,
they will reinstate coverage retroactively back to the date your COBRA
coverage started. If you don't pay in full before the end of the grace
period you could lose all COBRA rights.
- The employer stops providing a group health plan to all
employees.
The employer is required to notify the employee if COBRA is
canceled early.
Is my dependent eligible for COBRA if his or
her insurance coverage with my plan ends?
If coverage for your dependent(s) ends for the following
reasons, their coverage may be continued for up to 36 months:
- your death
- your divorce or legal separation
- a dependent’s change in status to ineligible
under your health insurance plan (a child comes of age, gets married,
etc.)
What about the person who has been covered
under COBRA for 36 months and is almost but not quite 65?
Thirty-six months is the maximum amount of continuation
coverage under COBRA. Employers may extend your continuation coverage
for a longer period, but COBRA does not require it. A few states
require group health insurers they regulate to extend continuation
coverage until the age of Medicare eligibility.
What happens to COBRA coverage if a person's
disability has ended?
If Social Security has determined the disability no longer
exists and the person is not employed, COBRA coverage may be
discontinued in the month that begins more than 30 days after Social
Security's decision. The beneficiary is responsible for notifying the
health plan administrator of the final determination.
Rising medical costs have made health insurance a household
necessity for most people, especially those with major illnesses such
as cancer. The COBRA law gives people a chance to hold on to this
important benefit for a while longer. Still, workers need to be aware
of changes in health care laws to keep their benefit rights. A good
place to look is in your health insurance plan booklet or with the
person who manages your plan. Most of the specific rules on COBRA
benefits can be found in 1 of these 2 resources.
How can I find out more about COBRA?
For more information about COBRA, call the Employee Benefits
Security Administration at 1-866-444-3272 or visit the Web site at: www.dol.gov/ebsa/faqs/faq_consumer_cobra.html.
You can also find a detailed brochure, An Employee's Guide to Health
Benefits Under COBRA, on the Web at: www.dol.gov/ebsa/pdf/cobraemployee.pdf.
If you have questions about your state's requirements about COBRA and
health insurance, you can find your state's insurance department by
contacting the National Association of Insurance Commissioners (see "Additional resources"
section below).
Additional
resources
More information from your American Cancer
Society
The following related information may also be helpful to you.
These materials may be ordered from our toll-free number,
1-800-ACS-2345 (1-800-227-2345).
National organizations and Web sites*
Along with the American Cancer Society, other sources of
information and support include:*
Centers for
Medicare & Medicaid Services (CMS) - HHS
Toll-free number: 1-800-633-4227
TTY: 877-486-2048
Web site: www.cms.hhs.gov
Health Insurance
Info, Georgetown University Health Policy Institute
(Offers free online Consumer Guides for Getting and Keeping Health Insurance for each state)
Web site: healthinsuranceinfo.net
National
Association of Insurance Commissioners (NAIC)
Toll-free number: 1-866-470-6242 (866-470-NAIC)
Web site: www.naic.org
For state insurance department phone numbers, visit: www.naic.org/state_web_map.htm
Patient Services
Incorporated (PSI)
Toll-free number: 1-800-366-7741 (may offer help for people with
certain types of cancers)
Web site: www.uneedpsi.org
U.S. Department
of Labor, Employee Benefits Security Administration (EBSA)
Toll-free number: 1-866-444-3272 (1-866-444-EBSA)
Web site: www.dol.gov/ebsa
*Inclusion on
this list does not imply endorsement by the American Cancer Society
No matter who you are, we can help. Contact us anytime, day or
night, for information and support. Call us at 1-800-ACS-2345 or
visit www.cancer.org.
References
US Department of Labor, Employee Benefits Security
Administration. An Employee's Guide to Health Benefits Under COBRA. The
Consolidated Omnibus Budget Reconciliation Act of 1986. September 2006.
Accessed at http://www.dol.gov/ebsa/pdf/cobraemployee.pdf on February
19, 2009.
US Department of Labor, Employee Benefits Security
Administration. Continuation of Health Coverage -- COBRA. Accessed at
www.dol.gov/dol/topic/health-plans/cobra.htm on February 19, 2009.
US Department of Labor, Employee Benefits Security
Administration. Frequently Asked Questions About COBRA Continuation
Coverage. Accessed at
http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.html on February 19,
2009.
US Library of Congress, THOMAS. American Recovery and
Reinvestment Act of 2009. Accessed at
http://thomas.loc.gov/cgi-bin/query/D?c111:8:./temp/~c111A67Ke0 on
February 19, 2009.
Last Medical Review: 03/05/2009
Last Revised: 03/05/2009
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