"An Employee's Guide to Health Benefits Under Cobra"

An Employee's Guide to Health Benefits Under Cobra is a 17-page legal document that was released by the U.S. Department of Labor - Employee Benefits Security Administration on September 1, 2015 and used nation-wide.

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AN EMPLOYEE’S GUIDE TO
HEALTH BENEFITS UNDER
COBRA
EMPLOYEE BENEFITS SECURITY ADMINISTRATION
UNITED STATES DEPARTMENT OF LABOR
AN EMPLOYEE’S GUIDE TO
HEALTH BENEFITS UNDER
COBRA
EMPLOYEE BENEFITS SECURITY ADMINISTRATION
UNITED STATES DEPARTMENT OF LABOR
This publication has been developed by the U.S. Department of Labor,
Employee Benefits Security Administration (EBSA).
To view this and other publications, visit the agency’s Website at dol.gov/ebsa.
To order publications, or to speak with a benefits advisor, contact EBSA elec-
tronically at askebsa.dol.gov.
Or call toll free: 1-866-444-3272
This material will be made available in alternative format
to persons with disabilities upon request:
Voice phone: (202) 693-8664
TTY: (202) 501-3911
This booklet constitutes a small entity compliance guide for purposes of the
Small Business Regulatory Enforcement Fairness Act of 1996.
Contents
Introduction .........................................................................................1
What is COBRA Continuation Coverage? ........................................2
Who Is Entitled to Continuation Coverage? .....................................4
Your COBRA Rights and Responsibilities:
Notice and Election Procedures .......................................................5
Benefits Under Continuation Coverage ...........................................8
Duration of Continuation Coverage ..................................................8
Chart: Summary of Qualifying Events,
Qualified Beneficiaries, and
Maximum Periods of Continuation Coverage ................................10
Paying for Continuation Coverage ..................................................11
Coordination with Other Federal Benefit Laws .............................12
Role of the Federal Government .....................................................12
Resources .........................................................................................13
Introduction
A health plan helps workers and their families
take care of their essential medical needs. It is
one of the most important benefits provided
by an employer.
There was a time when employer-provided group health coverage was at risk if an
employee was fired, changed jobs, or got divorced. Under the Consolidated Omnibus
Budget Reconciliation Act (COBRA), many employees and their families who would lose
group health coverage because of serious life events are able to continue their coverage
under the employer’s group health plan, usually at their own expense, at least for limited
periods of time.
This booklet explains your rights under COBRA to a temporary extension of employer-provided group health coverage,
called COBRA continuation coverage.
This booklet will:
Provide a general explanation of your COBRA rights and responsibilities;
Outline the COBRA rules that group health plans must follow;
Highlight your rights to benefits while you are receiving COBRA continuation coverage.
What Is COBRA Continuation Coverage?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires most group health plans to provide a temporary
continuation of group health coverage that otherwise might be terminated.
COBRA requires continuation coverage to be offered to covered employees, their spouses, their former spouses, and
their dependent children when group health coverage would otherwise be lost due to certain specific events. Those events
include the death of a covered employee, termination or reduction in the hours of a covered employee’s employment
for reasons other than gross misconduct, divorce or legal separation from a covered employee, a covered employee’s
becoming entitled to Medicare, and a child’s loss of dependent status (and therefore coverage) under the plan.
Employers may require individuals who elect continuation coverage to pay the full cost of the coverage, plus a 2 percent
administrative charge. The required payment for continuation coverage is often more expensive than the amount that
active employees are required to pay for group health coverage, since the employer usually pays part of the cost of
employees’ coverage and all of that cost can be charged to the individuals receiving continuation coverage. While
COBRA continuation coverage must be offered, it lasts only for a limited period of time. This booklet will discuss all of
these provisions in more detail.
COBRA generally applies to all group health plans maintained by private-sector employers (with at least 20 employees)
or by state and local governments. The law does not apply, however, to plans sponsored by the Federal Government or by
churches and certain church-related organizations. In addition, many states have laws similar to COBRA, including those
that apply to health insurers of employers with less than 20 employees (sometimes called mini-COBRA). Check with your
state insurance commissioner’s office to see if such coverage is available to you.
Under COBRA, a group health plan is any arrangement that an employer establishes or maintains to provide employees
or their families with medical care, whether it is provided through insurance, by a health maintenance organization, out of
the employer’s assets on a pay-as-you-go basis, or otherwise. “Medical care” typically covered by a group health plan for
this purpose includes:
Inpatient and outpatient hospital care;
Physician care;
Surgery and other major medical benefits;
Prescription drugs;
Dental and vision care.
Life insurance is not considered “medical care,” nor are disability benefits. COBRA does not cover plans that provide only
life insurance or disability benefits.
Group health plans covered by COBRA that are sponsored by private-sector employers generally are governed by ERISA
– the Employee Retirement Income Security Act of 1974. ERISA does not require employers to establish plans or to
provide any particular type or level of benefits, but it does require plans to comply with ERISA’s rules. ERISA gives
participants and beneficiaries rights that are enforceable in court.