The Consolidated Omnibus Budget Reconciliation Act (COBRA), was signed into law in 1986 requiring certain employers who sponsor group health plans to offer their employees and their families continuation of coverage at group rates that otherwise would have been forfeited under certain situations.
All employers who have 20 or more employees on 50 percent of their typical business days during the preceding calendar year must comply with COBRA. The only exceptions to this rule are:
- The federal government has its own rules regarding continuation coverage.
- Church plans (within the meaning of Section 414(e) of the Internal Revenue Code).
COBRA is available to individuals who were covered under the group health plan on the day preceding any of the following qualified events:
- Voluntary or involuntary termination
- Reduction in hours that would result in loss of group health coverage
- Death of the employee
- Employee becoming entitled to Medicare coverage
- Divorce or legal separation
- Dependent child ceasing to be a dependent
The employee must give the employer or plan administrator notice with in sixty days of a divorce or legal separation, a child reaching the limiting age or the employee becoming entitled to Medicare. Failure to give timely notice of these qualifying events will result in a loss of eligibility for COBRA continuation of coverage.
Continuation of coverage is available for up to eighteen (18) months for the employee in the case of termination of employment or reduction of hours. Continuation of coverage is available for up to thirty-six (36) months for the spouse or dependent in the case of entitlement to Medicare, divorce or legal separation, or for the child ceasing to be a dependent. Each Qualified Beneficiary has the same rights under the group health plan as a similarly situated active employee including the right to add an eligible dependent such as a newly adopted child to their coverage. COBRA continuation of coverage may not be available to an employee or dependents if the employee was terminated for gross misconduct. The employer or plan administrator, not HPS, determines what constitutes gross misconduct.
Pursuant to the American Recovery and Reinvestment Act (P.L. 111-5) any employee who was involuntarily terminated from employment between September 1, 2008 and May 31, 2010 may be eligible for a premium subsidy for up to fifteen (15) months of COBRA continuation coverage. The employee must have been covered by the health plan on the day before the qualifying event, been eligible for COBRA continuation at the time of termination, must elect COBRA continuation coverage, and must pay the premium as set out in the COBRA notice. The premium for Assistance Eligible Individuals will be thirty-five (35%) percent of the normal COBRA premium. Dependents of Employees who are involuntarily terminated during this period of time, who were covered by the health plan on the day before the qualifying event may also be eligible for the premium subsidy. The premium subsidy can last for up to fifteen (15) months, after which, the COBRA participant must pay the full cost of the COBRA continuation premium. The premium subsidy is also available for individuals eligible for Georgia continuation of coverage if they were involuntarily terminated between September 1, 2008 and May 31, 2010 for the same fifteen (15) month period.
Health Plan Select has contracted with
ADP to administer COBRA for any groups, which elect to have HPS provide this service. This is a value-added service provided to HPS employer groups at no additional cost. Allowing
ADP to administer your COBRA will keep you compliant with this complex federal law. Participants may call the Participant Solution Center at 866-618-1699 for more information.
