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 beneficiaries.

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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