COBRA refers to the Consolidated Budget Reconciliation Act of 1985, and specifically to the Title X of the Act. This benefit allows the member of a group policy, who has lost their coverage due to a “qualifying event” to continue coverage the former employee’s expense for a period of time. This is the same group policy with the primarily difference of having the former employee paying the total premium. The COBRA option may be elected after leaving work and if elected the former employee may have this continuation of group coverage for up to 18 months and longer if divorced or if spouse has passed on.
Here are a few answers to commonly asked questions on COBRA for the 2012 year.
Q: Since the Patient Protection and Affordable Care Act (the PPACA signed into law 2010) is phasing in, are employers still required to administer COBRA?
A: Yes, in fact, there was no mention of COBRA in the PPACA legislation. Continuation coverage will likely become more cumbersome for employers and carriers under health reform. As individual choices increase so too will the requirement to explain cover options and choices to participants.
Q: When PPACA goes into effect, will terminating employees have to be offered COBRA? Won’t they have access to guaranteed issue at the exchanges?
A: While no clear direction has been published, here’s what we know. The intent of the exchanges is to offer more choices and drive down costs. The current requirement in most states for groups subject to mini-COBRA with fewer than 20 employees, and for those subject to federal COBRA with more than 20 employees is as follows:
- Those who experience a qualifying event (including termination of employment) are entitled to be offered continuation coverage (the ability to continue on the group coverage at the same rate under the same plan).
- They should also be afforded the opportunity to keep the coverage for a period of time.
- At the time of the qualifying event, the person might be in the middle of a deductible or in the midst of treatment supported by the current plan. So if the continuant is in the midst of services or treatment, a continuation option greatly eases the transition.
With these facts in mind, employers should plan to offer COBRA even after PPACA goes into effect. Employers will likely have to present any/all options to terminating employees.
Q: What are the most common COBRA mistakes that employers make?
A: We all know COBRA is complicated, especially during and after open enrollment. Below are a few of the most common oversights:
- Failing to give appropriate notices – especially to qualifying beneficiaries.
- Failing to offer open enrollment to COBRA participants.
- Providing more coverage than what is required, or for longer than required.
- Failing to document when notices were sent
- Forgetting to collect COBRA premiums from participants.
- Overpaying insurance invoices and/or continuing to pay for participants who have dropped off the plan.
Doug Gulleson loves to scuba dive overseas and makes sure he has his US health care and overseas health care, dev.gninsurance.com, information with him at all times when he travels Keep our blog close by you, www.gntravelinsurance.com, for continual updates on the changes with the US health care system.