Medcom took some time this week to ask these five individuals the following question:
What is a COBRA Qualifying Event?
This is the picture of their answer…
That isn’t true, we didn’t ask the above stock photo individuals about COBRA qualifying events, but if we had it is very likely this would have been their answer. In order to clear up any confusion, we would like to dig a bit deeper into COBRA: what does it mean, why do we have it, when and how do we get it, and what Medcom can do to help you and your employees.
First Thing First: What is COBRA?
COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985, a federal law that requires employers, with 20 employees of more, to offer continuing healthcare coverage to employees and their spouses and dependents who would otherwise lose their health benefits due to a qualifying event.
Who is Entitled to Receive COBRA Benefits?
Employers who employ 20 or more employees must offer COBRA benefits to qualified beneficiaries. These beneficiaries include:
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full & part-time employees, if they are participants in your plan on the day before the qualifying event
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their spouses
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their dependents
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retirees (unless Medicare eligible and their plan terminates)
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partners in a partnership
Coverage does not have to be offered to:
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an ineligible employee for the group health plan
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an eligible employee who declined group health plan coverage
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an individual who is enrolled in Medicare
Now the Biggie: What is a Qualifying Event?
Events that trigger the offering of COBRA coverage are defined as qualifying events. Qualifying events are defined as:
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The termination of employment, unless the employee was released due to gross misconduct
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Reduction of covered employee’s hours causing a loss of coverage*
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Covered employee or retiree’s death**
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Divorce or legal separation from covered employee
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A dependent child ceases to be a dependent under the terms of the plan***
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The covered employee becomes entitled to Medicare and plan terminates coverage
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A covered retiree, or their spouse and/or dependents lose coverage one year before or after the commencement of bankruptcy procedures for employer (retiree plans only)****
*If a covered employee’s hours are reduced by the employer and that reduction causes them to lose their health coverage that employee is now eligible to receive COBRA benefits.
**If a person is covered under their spouse’s health plan associated with their employment and the spouse dies, the wife or husband is eligible for COBRA coverage.
***If a dependent loses coverage because they reach the age threshold for the plan, that dependent is eligible for COBRA.
****If the employer files for bankruptcy it is considered a qualifying event for retiree plans only.
How Do EMPLOYEES Learn More About COBRA Coverage?
If employees have questions regarding their COBRA eligibility, qualifying events, spouse and dependent coverage, or how to elect coverage they should see their HR department. There are many online resources that can define terms and explain the law, however, each employer is different and may have additional guidelines to follow. Check with your employer to receive the most relevant and useful information for your circumstance.
How Do EMPLOYERS Learn More About COBRA Coverage?
It is required by law for employers to offer COBRA coverage to eligible employees. As you have read above, there are also requirements regarding qualifying events. Other things that we haven’t discussed in this blog are COBRA Notification Timelines for businesses, the responsibility of the employer, monthly reports and payments, COBRA termination, the list goes on. As it happens in the world of healthcare, things get complicated very quickly. One way employers can reduce confusion and ensure compliance with the law is reach out to Medcom Benefit Solutions and inquire about our COBRA Premium & Retiree Billing Services. We take the stress of COBRA compliance, filing, billing, and reporting off your shoulders!
