January 29, 2016
Employers with more than 20 employees are required to offer the employee the option of continued group health care coverage for up to 18 months. In some cases, including disability, the COBRA period is longer.
1. Employees should be notified of their COBRA rights as soon as they are terminated. Following the termination, the beneficiary must be notified 14 days after the administrator is notified of the event.
2. Generally, a qualifying event entitling an employee to COBRA rights occurs when the employee is terminated or his/her hours of work are reduced; thus making the employee ineligible for benefits.
3. After receiving notice, the employee has 60 days to decide to continue coverage. If the employee waives the coverage, he/she has 60 days to revoke the waiver.
4. The beneficiary has 45 days to submit the premium due after electing to continue coverage.
5. Continuation rights can last for up to 36 months if one of the following events occurs:
(a) Divorce or separation from spouse.
(b) Death of covered employee.
(c) The covered employee is entitled to Medicare.
(d) The loss of dependent child status under the plan.
(e) Two notices should be sent by you to the employee - one following the termination from employment and one notifying the former employee that their benefits under COBRA are about to expire.
(f) To comply with COBRA’s burdensome recordkeeping and notice requirements, communicate regularly with your plan administrator and
document all qualifying events and election and payment periods.
6. The American Recovery and Reinvestment Act of 2009 provides for premium reduction for COBRA benefits. Eligible individuals pay only 25% of their COBRA premiums, and the remaining 65% is reimbursed to the employer through a tax credit.