Cobra Health Coverage Insurance Who Qualifies?
In order to protect the rights of those who do not have health insurance due to a
separation from service, Congress passed the Consolidated Omnibus Budget Reconciliation Act, or COBRA, in 1986. This law essentially states that if an individual participates in a group health care plan through their employer, they will be allowed a continuation of that coverage to help with health care costs while seeking new coverage. However, during this period, regardless of how the cost was set up previously, the employee will be responsible for paying the entire cost.What Types of Employers Must Offer COBRA?
Companies that have employed 20 full-time workers for at least half of the business days in the prior year are required to offer COBRA plans. Calculating the 20 full-time workers, however, can be done by taking those who truly work full-time hours, as well as a fraction of the part-time workers hours. Therefore, even if a company has few full-time but many part-time employees, it may still be required to offer COBRA to its workers.
There are some exceptions to this rule. Companies that are in the private sector, as well as state and local government employers must offer the coverage. However, some exceptions include the federal government, churches, and certain church related entities.
Which Employees Qualify for COBRA?
Employees are allowed to use COBRA if they have experienced what is known as a qualifying event. These types of events include leaving their employer regardless of whether it is voluntary or involuntary.
They may also include a reduction in the employees hours such that he or she is no longer classified as a full-time employee who is eligible for benefits. Prior to being considered as qualified, the worker must have actually been enrolled in the health care plan of the employer.
The COBRA statute actually states six specific events that, if the individual loses their employer provided health insurance coverage, will be considered a qualifying event. These events include:
Termination, either voluntary or involuntary, of the covered employee. This holds true unless the employee is let go for gross misconduct.
The qualifying event determines how many months an individual or their family is eligible for coverage. This is typically eighteen months, although depending on the event one of the longer periods of time may be applicable.
There are also some instances that do not count as being a qualified event. For instance, if the employer decides to terminate the group health plan or if it decides to amend the plan in order to reduce coverage, then neither the plan termination nor the plan being amended will count as a qualifying event.
Should a qualifying event take place, the employee must be sent two notices. These include the qualifying notice and the initial notice. These notices let the individual know that their COBRA rights and obligations with regard to the specific qualifying event.
The initial notice is required to be sent to the employee and their dependents, if applicable by the group health plan upon them first becoming covered by the plan. This notice will inform the individuals of their rights under COBRA at the time of the commencement of the coverage under the plan.
If or when a qualifying event occurs in the future, then the employee and their applicable dependents must be sent a qualifying event notice. This notice will advise the individuals of their rights under COBRA. It will also offer them the opportunity to elect continuation of their group health insurance benefits under COBRA.
COBRA Alternatives
Should an individual and / or their qualified dependents decide not to use COBRA coverage, there are other options. Because COBRA can be costly, it may be wise to compare the premium cost of comparable health insurance benefits with a stand-alone individual or family plan.
If the employee and applicable dependents know that they will soon be covered under a new employers health insurance plan, then even a temporary health insurance policy may be more beneficial, especially in terms of cost.
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