What Is COBRA?
In 1985, Congress enacted continuation
of health care coverage requirements, commonly referred to
as COBRA. COBRA stands for the Consolidated Omnibus Budget
Reconciliation Act and was designed to protect certain
employees and their dependents when they experience a loss
of coverage under a group health plan. COBRA provides
continuation of health coverage that otherwise would have
been terminated due to certain qualified events. COBRA
administration is made more difficult by constantly changing
rules and regulations.
Federal COBRA regulations require that businesses with 20 or
more full or part-time employees on 50% of the typical
business days during the previous calendar year are required
to offer continuation of coverage under COBRA.
Cal-COBRA, which mimics many of the Federal COBRA
requirements, lowers this thresh-old to 2 or more employees.
COBRA applies to employees, the employee's spouse and
dependent children, and may apply to other covered
individuals. These individuals are referred to as ?qualified
beneficiaries.? Many organizations that sponsor health
insurance benefits, assume that COBRA only requires that if
an individual loses coverage? They must be given the right
to continue it on their own. In reality, COBRA has many
requirements that involve notices, time frames, and tracking
for as long as 36 months.
For example, once individuals are covered under a qualified
plan, they must receive a Department of Labor General
Notice. This notice is required to be provided to all
qualified beneficiaries. Simply handing a letter to the
employee is not sufficient. The General Notice specifically
lists the rights and responsibilities of those
Properly communicating the General Notice is the first step
required in COBRA administration. Under COBRA, if an
individual has a qualifying event and loses coverage under
the plan, a Qualifying Event letter is to be provided to the
employee and their qualified beneficiaries.
The Qualifying Event notice provides them with the right to
continue coverage under the plan provided they elect COBRA
and continue premium payments. Further, there are HIPAA
certificates, premium collections, record keeping
requirements and time-frames that must be adhered to.
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