Good Neighbor Insurance at www.gninsurance.com continues to update our clients on the new health insurance laws. There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work. Many critical details of this new insurance law will be clarified in the months and years to come.
These six major coverage options are:
(1) Individual or family coverage (private health care plans)
(2) Employee/employer group option for small businesses (typically under 50 employees)
(3) Employee/employer group option for large businesses (typically larger than 50 employees)
(4) Exchange options through the state you are residing in (fully integrated 1-1-2014 and are quasi-government and private insurance coverage combined)
(5) Medicare (which include Parts A, B, C, and D) for those 65 years onwards
(6) Full government health plans like Medicaid, CHIP, TRICARE, VA, and other coverage plans as may be designated by the Department of Health and Human Services based mostly on financial criteria and/or military service.
Congress passed The Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1986. One of the provisions of COBRA is to provide certain individuals with the right to temporarily continue their health coverage at group rates. The law generally applies to employers who sponsor a group health plan and have 20 or more full or part time employees during 50 percent or more of the business days in the preceding calendar year. A “group health plan” is defined as a plan that provides medical benefits for the employer’s own employees and dependents through insurance, HMO, or self funded arrangement. Medical benefits may include:
1. Hospital Care
2. Physician Care
3. Prescription Drugs
4. Other types of medical care, such as dental and vision.
Life insurance is not covered under COBRA.
Qualifying Events are events that would cause a covered employee to lose group health coverage. The Plan Administrator will send a Qualifying Event Notice to a Qualified Beneficiary who has a Qualifying Event as listed below.
1. Termination of employment (for reasons other than gross misconduct)
2. Reduction of hours worked by the covered employee.
3. Death of the covered employee.
4. Divorce or legal separation.
5. Dependent child no longer meets the plan’s eligibility requirements.
6. Dependent loses coverage due to the employee becoming entitled to Medicare.
7. Company files for Bankruptcy under Chapter 11 of the U.S Bankruptcy Code.
Length of Coverage for Qualifying Events
The length of COBRA continuation coverage that must be offered depends on the type of Qualifying Event. When a Qualifying Event causes a loss of coverage, the employer must allow COBRA continuation coverage under the group health plan for up to 18 months for Qualifying Events that are the termination of employment or reduction of hours. This period may be extended to 29 months if the Qualified Beneficiary is or becomes disabled at any time during the first 60 days of continuation coverage. A second Qualifying Event for a dependent occurring during the 18-month continuation coverage period of the first Qualifying event extends the original period to 36 months.
It is important to note, however, that COBRA continuation coverage may terminate prior to the end of the maximum coverage period for any of the following reasons:
1. Non-payment of premiums. Continuation coverage for a Qualified Beneficiary may be terminated if the premiums are not paid in a “timely” manner. A payment is considered “timely” if it is made on the due date, or within the 30-day grace period (45 days for the initial premium payment).
2. Termination of all Group Health Plans. Continuation coverage for a Qualified Beneficiary may be terminated if the employer ceases to sponsor any group health plan.
3. Other Coverage. Continuation coverage may be terminated if the Qualified Beneficiary first becomes covered under another group health plan, which does not contain any pre-existing exclusion limitation, after the Qualified Beneficiary elects COBRA continuation coverage.
4. Entitlement to Medicare. Continuation coverage may also be terminated if the Qualified Beneficiary first becomes entitled to Medicare after the Qualified Beneficiary elects COBRA continuation coverage.
5. Loss of Social Security Disability Status. Continuation coverage may be terminated if the
Qualified Beneficiary is determined to be no longer disabled by the Social Security Administration. Coverage can, however, be terminated only during the 11-month disability extension period.
6. Termination for Cause. Continuation coverage may be terminated, for cause, if the Plan would otherwise terminate coverage on that basis for similarly situated covered employees.
18 Months for Qualifying Events:
1. Termination of employment for reasons other than gross misconduct.
2. Reduction in the number of hours of employment. For these Qualifying Events, the maximum continuation coverage period will be 18 months, measured from the date of the Qualifying Event. This maximum coverage period may be extended to 29 months if a Qualified Beneficiary who is, under Title 11 or XVI of the Social Security Act, determined to have been disabled at the time of a Qualifying Event, or, within the first 60 days of COBRA continuation coverage for all Qualified Beneficiaries. COBRA continuation coverage may be expanded to 36 months for a spouse or dependent of an employee who has experienced one of the above listed Qualifying Events if a second Qualifying Event occurs, (such as divorce, legal separation, death of the employee, Medicare entitlement, or loss of dependent child status) during the original 18 month COBRA continuation coverage period. Notification by the Qualified Beneficiary should be made to the Plan Administrator within 60 days of the second Qualifying Event, and within the original 18 month COBRA continuation coverage period.
36 Months for Qualifying Events:
1. Death of the covered employee.
2. Divorce or legal separation.
3. Dependent child ceases to meet the plan’s eligibility requirements
4. When dependents would lose coverage due to covered employee becoming entitled to Medicare (see next section). For these Qualifying Events, the maximum coverage period will be 36 months, measured from the date of the Qualifying Event, or, up to 36 months measured from the date of the covered employee’s Medicare entitlement, if the covered employee becomes entitled to Medicare and, within 18 months thereafter, has a Qualifying Event that is either termination of employment, or reduction of hours.
29 Months for Qualifying Events:
A Qualified Beneficiary who is determined under Title II or XVI of the Social Security Act, to have been disabled at the time of a Qualifying Event, or, within the first 60 days of COBRA continuation coverage for all Qualified Beneficiaries, may be eligible to continue coverage for a total of 29 months (11 additional months). The Qualified Beneficiary must provide, to the Plan Administrator, a determination of disability from the Social Security Administration
within 60 days of the date of the determination, and prior to the end of the original 18-month COBRA continuation coverage period. The employer is permitted to charge up to 150% of the applicable premium during the 11 month disability extension. The Qualified Beneficiary is also required to notify the Plan Administrator, in writing, if the Social Security Administration has determined that the Qualified Beneficiary is no longer disabled under Title II or XVI of the Social Security Act. Bankruptcy of the Employer When a retiree, spouse or child of a retiree loses coverage within one year before or after the commencement of proceedings under Chapter 11 of the U.S. Bankruptcy Code
The maximum period of COBRA continuation coverage is as follows:
1. Coverage will continue, until the date of death, for covered employees, who retired on or before the date of the loss of coverage. Lifetime coverage is also available to widows or widowers of retirees.
2. Continuation coverage will be made available for the spouse and dependent children of a retiree for 36 months from the date of death of the retiree.
The employer may not deny to the Qualified Beneficiary the option of COBRA continuation coverage based on the fact that the Qualified Beneficiary has other health coverage prior to the date COBRA continuation coverage is elected.
The employer, however, is not required to offer COBRA continuation coverage to individuals who have been terminated from employment because of “gross misconduct” (IRC section 4908B (f)(3)(B). Unfortunately, “gross misconduct” is not defined in COBRA law. In the absence of any clear guidance from the IRS or Department of Labor on what constitutes gross misconduct, the employer should consider denying continuation coverage only in cases where the employer has a clear, well-documented case of gross misconduct. There have been numerous court cases in which ex- employees have sued challenging their former employers’ failure to offer continuation coverage. Because of the nature of the alleged behavior, what might be considered gross misconduct in one job or industry may not be considered as such in another, and as a result, there has been no clear standard to follow. It is recommended that before a Plan Administrator denies continuation coverage to a Qualified Beneficiary because of termination due to gross misconduct, they make certain that they are able to produce sufficient documentation to back the claim. Also, if the employee accused of gross misconduct is allowed to resign, this may be seen as intent on the employer part to waive COBRA.
Doug Gulleson loves to scuba dive overseas and makes sure he has his U.S. health care and travel medical insurance, http://onlineglobalhealthinsurance.com/my-travel-guard.asp , 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 U.S. health care system.