COBRA and state continuation
What is Cobra Continuation coverage and, under the State law of Virginia, when must a company make it available to me?
As opposed to individual insurance, Cobra Continued and State Continuation coverage both offers health insurance benefits as an extension of an overall group plan in which an individual was enrolled.
Should an individual be leaving a job in which they had formerly had group coverage, then he/she may able to stay in the plan for an extended period through COBRA or State Continuation Coverage. In order to be eligibility to enroll in Cobra continuation plans, it is required that an individual has met the following criteria:
1) Individual formerly worked for an employer which had 20 or more employees.
Note: However, if he/ she worked for an employer with between two and 19 employees, they may qualify for state continuation coverage.
2) Second, individualýs coverage under the employerýs group health plan must have been credited as: employee or as the spouse or dependent child of an employee.
3) Last, individual must have experienced a qualifying event (see below) which caused he/she to to lose group health coverage.
For employees:
ý Reduction in numbers of hours worked
ý Voluntary or involuntary termination of employment for reasons other than gross misconduct
For spouses:
ý Loss of coverage by the employee because of one of the qualifying events listed above
ý Covered employee becomes eligible for Medicare
ý Death of the covered employee
ý Divorce or legal separation of the covered employee
For dependent children:
ý Loss of coverage because of any of the qualifying events listed for spouses
ý Loss of status as a dependent child under the plan rules
MORE information about the workings of Cobra:
Each person who is deemed as eligible for COBRA continuation coverage hs the right to independently make their own decision of whether to stay with the plan or seek coverage elsewhere.
Prior to being able to qualify as federally eligible, an individual must first use up any COBRA or state continuation coverage presently available.
By law, an individual must be notified of his/her COBRA rights upon the time of enrollment. He/she must also be informed at the time which they become eligible to receive COBRA coverage.
The notice rules are somewhat complicated and you should contact the U.S. Department of Labor for more information.
On whom is the ONUS to Notify a GROUP HEALTH PLAN?
Generally speaking, the employer has 30 days to notify a group plan should an individualýs ýqualifying eventý involves: death, termination, reduction in hours worked, or Medicare eligibility of a covered worker. Should, however, the ýqualifying eventý involve: divorce or legal separation or loss of dependent status, the onus is on the individual to notify within the group health plan within 60 days of becoming eligible.
Once the group health plan has received word of the inducteeýs ýqualifying event,ý they have 14 days to send a notice to the individual instructing them on how to obtain COBRA Continuation Coverage. In turn, eligible family members are then given 60 days to enroll.
Once enrolled in COBRA Continuation Coverage, all of an individualýs medical | health costs since the ýqualifying eventý become retroactive. Note: Premiums must also be paid for this time period.
The information presented below was taken from publications prepared by the U.S. Department of Labor. You should contact them for more information about your rights under COBRA.
What benefits does COBRA Continuation Coverage offer?
Benefits under COBRA Continuation Coverage will remain the same as they were under oneýs former plan. Hence, previously, should an individual have had complete coverage over the areas of: medical, hospitalization, dental, vision, and prescription drug allowances, with COBRA, he/she may retain identical coverage. However, should one decide not maintain coverage over all the same areas, then he/she has the option to either keep some or all of the original coverage.
If an employer changes the health insurance benefits after oneýs qualifying event, he/she must be offered identical coverage to that of all the other active employees.
Note: COBRA does not cover life insurance.
Should I be concerned about obtaining coverage for my pre-existing condition?
ý Under COBRA, on account of the fact that an individual is simply continuing their existing coverage, he/she will not need to withstand a new pre-existing condition exclusionary period. Yet, if one was in the midst of a pre-existing exclusionary period, he/ she should expect to complete the process.
What types of fees should I expect to pay for COBRA Continuation Coverage?
ý Similar to standard polices, an individual moving into a COBRA Continuation Coverage plan will be required to pay the entire premium (employer and employee share, plus a 2% administrative fee.) Generally, the initial premium is due within 45 days of electing COBRA Continuation Coverage.
ý In contrast, if one opts for the 11 month disability extension, then the premium increases to 150% or 1ýtimes the total cost of coverage.
For how long can I count on COBRA Continuation Coverage?
Typically, COBRA Continuation Coverage remains in force for a period of up to 18 months. Yet, some disabled persons can extend their coverage for a period of up to 29 months, while dependents may be eligible for upwards of 36 months. Note: COBRA Continuation Coverage is NOT renewable.
When will my coverage under COBRA end?
In most instances, COBRA Continuation Coverage ceases when an individual opts into a new health insurance plan. However, persons may use up their existing COBRA coverage if his/her new plan has an initial waiting or a pre-existing exclusionary period..
COBRA coverage may also end in instances when the former employer stops offering employees the provision of health insurance benefits.
A third way that oneýs COBRA coverage may come to a halt is if he/she was formerly in a managed care plan available only within particular geographical regions and he/ she moves out of the area.
Yet, even under such conditions, should one be moving out of their current planýs service area but are still qualify for COBRA, his/her employer must offer up another plan that will be operable in the new territory so long as the employer already offers such a plan to employees.
Note: For specifics, ask your former employer or contact the U.S. Department of Labor.
What about Virginia continuation coverage?
ý Each employer chooses whether its employees are offered a continuation policy or a conversion policy when they are no longer eligible for coverage under the employerýs fully insured plan. The insurer is only required to provide one of these policies, not both. Most employers choose the conversion policy, not the continuation policy.
In order to be eligible for continuation coverage, you must have been covered for 3 months prior to the event that caused you to lose your eligibility for the employerýs plan. All family members that were covered under your old plan may be covered under your state continuation plan. Coverage may be continued for up to 3 months. Ask your former employer or the Virginia Bureau of Insurance about state continuation coverage if you think it applies to you. | 
