Most workers have healthcare through their employer. As a result, in the event of job or life changes, such coverage may be affected. COBRA is one way that the law protects workers from fully and immediately losing their healthcare benefits. However, there are also ways that COBRA, when not adhered to properly, can negatively impact workers.
What Is COBRA, and Who Can Receive It?
COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985. It’s designed to protect employees so that when they lose their jobs, they don’t also forfeit their healthcare. This is called continuation coverage. Any employer with 20 or more workers that offers healthcare is required by law to offer them continued benefits if they have no alternative healthcare options when they are fired, laid off, or their hours are reduced. If you’re on a group health plan and are covered the day before a qualifying event occurs — a layoff, firing, hour reduction, or other specified circumstance — you are eligible to receive COBRA. That includes part-time employees, full-time employees, retirees who aren’t eligible for Medicare, and their spouses, dependents, and/or partners. You aren’t guaranteed COBRA coverage if you were not eligible for the group health plan, declined participation in it, or are enrolled in Medicare. Qualifying events include job termination — except if the firing is due to a worker’s “gross misconduct” — reduced hours, changes in a dependent’s status, business bankruptcy, and more. COBRA coverage can last anywhere between 18 and 36 months after a job loss.
Getting COBRA
When you start a job and enroll in its group healthcare plan, or prior to a qualifying event, you should receive an Election Notice that details how you can enroll in COBRA. A valid Election Notice includes:
- The name of the plan, and the name, address, and telephone number of its administrator
- The qualifying event
- The beneficiaries
- A detailed explanation about continuation coverage and how to enroll
- What happens when healthcare coverage ends and the worker doesn’t enroll in COBRA
- What can cause early termination of COBRA and when it is scheduled to end
- Payment information
Possible COBRA Notice Errors
If you face a qualifying event and work at a company of 20-plus employees, it’s likely your employer is responsible for continuing your healthcare coverage. If they don’t, it may be illegal. It is your employer’s job to tell insurance companies when a worker is eligible to receive coverage due to a qualifying event within 30 days of that event. On the other side, if an employee experiences a qualifying event like divorce or loss of dependent coverage, they must tell their employer within 60 days. Either way, after that notice is given, the administrators of the group health plan should make employees aware of their COBRA rights within 14 days. Where do errors happen? There may be complications with your COBRA notice that lead to your not getting the coverage to which you are entitled. These issues include:
- An employer failing to provide COBRA notice in a timely manner
- An employer giving incorrect COBRA information (e.g., not properly describing how a person can exercise their right to coverage)
- Notice failed to identify the name, address, and telephone number of the plan administrator
- Notice failed to identify the qualifying event
- Notice failed to explain how to enroll in COBRA coverage
- Notice failed to provide all the required explanatory language regarding the coverage
- Notice was not written in a manner calculated to be understood by the average plan participant; and/or
- Notice failed to comply with the model notice created by the Department of Labor (“DOL”).
The Department of Labor is responsible for disclosure and notification requirements, and has a guide to help you understand COBRA coverage.
What About FMLA?
Being away from work due to circumstances covered by the Family and Medical Leave Act (FMLA), such as caring for a newborn or ill family member, is not a qualifying event that triggers COBRA continuation coverage. You should be treated as though you were actively working for your company, without any changes to your healthcare benefits.
Morgan & Morgan will review your COBRA notice for free. Get started today.