COBRA

In 1986 Congress passed the Consolidated Omnibus Budget Reconciliation Act, known as COBRA. This Act provides an important link between employees, their spouses, children, and health insurance plans. If you've quit, been laid off, or even terminated, there now is an important protection for families in the midst of a crisis, such as unemployment. COBRA also extends beyond the employee, providing the same protection for spouses and dependent children, when the loss of health coverage is due to divorce, death, or even when your child reaches the age he/she is no longer covered under your health plan.

THE LAW

COBRA establishes required periods of coverage for continuation of health benefits, which includes medical, dental, vision, and medical flexible spending accounts. Qualified Beneficiaries generally are eligible to continue coverage under these plans for up to 18 months in the event of a qualifying event that is due to termination of employment or a reduction of hours of work. There are "Secondary Qualifying Events" during the initial period of coverage, which may permit a beneficiary to receive a maximum of 36 months of coverage.

There are special rules for disabled individuals, allowing an extension of the original 18 months of coverage to a maximum of 29 months. If the qualified beneficiary is determined under Title II or XVI of the Social Security Act to have been disabled at the time of a termination of employment or reduction of hours of employment and the Qualified Beneficiary notifies EBS/Atlanta of the disability determination, the 18-month period will be expanded to 29 months.

The chart below outlines the types of qualifying events, which beneficiary is eligible for COBRA, and the maximum coverage time. If you qualify for COBRA continuation coverage, then you would be eligible to continue your health plans for the maximum period allowed under the law. However, there are certain guidelines that must be followed, involving COBRA notifications, election of COBRA and premium payments.

It's important to be notified

On the loss of employment, for whatever reason except "gross misconduct", your employer notifies EBS/Atlanta of your termination reason. A letter is then sent to you advising of your COBRA rights and notifying you of your election period. This notice will be sent to the last recorded address your employer has on file. The notice begins what is commonly called the Election Period. This period is the time frame during which each qualified Beneficiary may choose whether to continue health care coverage under the employer's group health plan. You will have a 60-day period to elect whether to continue coverage. The cost to continue your benefit choices will be included in the notice sent to you by EBS/Atlanta. Failure to respond to the notice within the 60-day period will make you and your dependents ineligible to elect coverage under your employers group health plan.

The notice explains to you additional guidelines, as described under COBRA, concerning premium payments and time frames. Once your notice is returned to EBS/Atlanta and the first months premium has been paid, your elected health carriers will be notified of your COBRA election and coverage will be reinstated back to the date of your qualifying event. If any medical expenses incur during this election period and are denied by your insurance carrier due to termination, they will need to be resubmitted for consideration after your insurance carrier has been notified of your COBRA election.

The cost

While the time line for electing COBRA coverage is important to follow, the law also mandates requirements that must be followed in making premium payments. Your former employer will no longer be paying a portion of your health insurance premiums. You will be responsible for paying the full amount, plus an administrative fee of up to 2%. All premiums established are due on a certain date, usually the first of each month. The law also allows a grace period for making premium payments. The grace period is 30 days after the due date. Premium payments made after the due date and applicable grace period will result in termination of your health insurance plans. Coverage will not be reinstated if the premium is not made in the proper time frame. Premium payments can be made by check, money order or by DIRECTPAY.

COBRA COVERAGE PERIODS

COBRA Reminders

Premium Payments
After you elect COBRA, you have to pay the first premium within 45 days. Most likely, the first premium will be higher because it covers the period retroactive to the date coverage ended through your employer. Successive payments are due the first of each month, but COBRA rules allow for a 30-day grace period after each due date for payment.

Extensions
COBRA set specific time limits on coverage. However, you may contact your insurance carriers directly to discuss a conversion plan or an individual policy at the end of your COBRA time frame.

Switching plans
If you are now on COBRA and your employer offers an open enrollment period to active employees you must also be given the option to switch plans during that time.

Rates
Your employer, not EBS/Atlanta, determines rates for insurance premiums. Rates are usually determined for a 12-month period, the insurance contract period. Rates may change at the beginning of each contract period.

Payment options
Premium payments can be made by check or money order. DIRECTPAY is also an option: see the guidelines for DIRECTPAY under Forms. Third party checks are also accepted, as well as, e-checks. However, it is the responsibility of the Beneficiary to make sure the third party check or e-checks arrive within the applicable grace period.

Status of My Account
As a qualified beneficiary, you will have the option of reviewing your account information on line at any time. You will receive an access code from EBS/Atlanta to view your personal data, to verify coverage information, premium payments and status dates.