What is a “qualifying event” under COBRA?
A qualifying event occurs when one of the events listed below causes a loss of coverage under the group health plan’s terms.
For the employee, spouse, and dependents:
- Voluntary or involuntary termination of an employee (except for “gross misconduct,” which is undefined in the regulations).
- A reduction in hours of employment that results in the loss of benefits or an increase in premiums or contributions.
For spouses and dependents only:
- Divorce or legal separation from the employee.
- Loss of dependent child status.
- Death of covered employee/retiree.
- Employee entitlement to Medicare.
How does COBRA continuation coverage work for beneficiaries?
Qualified beneficiaries must be given all of the same open enrollment rights and options that are given to active employees. Any open enrollment materials that are provided to active employees must also be provided to qualified beneficiaries. If an employer modifies coverage for active employees, the same modifications apply to the corresponding COBRA continuation coverage (e.g., the employer changes insurance carriers or changes from an HMO to a PPO).
How long is COBRA continuation coverage available?
Generally, the maximum coverage period (the period that COBRA continuation coverage is available) is 18 months for employee qualifying events (termination or reduction of hours) and 36 months for spouse and dependent qualifying events.
How can brokers assist employers with COBRA administration?
Brokers can provide guidance on COBRA compliance, help employers understand their obligations, and connect them with experienced COBRA administrators like Sterling Administration to streamline the process.
What are the key responsibilities of employers regarding COBRA?
Employers must notify their group health plan administrators of a qualifying event within 30 days. They are also responsible for providing COBRA election notices to eligible employees and ensuring compliance with all COBRA regulations.
What should employers do to ensure COBRA compliance?
Employers should regularly review their COBRA procedures, stay updated on regulatory changes, and work with knowledgeable administrators to ensure all necessary actions are taken to maintain compliance. Effective employee benefit management acts as an extension of a company’s HR team.