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COBRA FAQs

What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) represents legislation passed in 1986. For employers with more than 20 employees that sponsor group health plans, the law provides continuation of group health coverage for individuals that otherwise would have lost benefits after a qualifying event, such as separation from the company. COBRA contains provisions giving qualified former employees, retirees, spouses and dependent children the right to temporary continuation of health coverage at group rates.

What are the exceptions to COBRA?

• Small employers – with fewer than 20 employees
• Government employers
• Church plans
• An employer that has a plan that is not a group health plan as defined by COBRA rules

Who is a Qualified Beneficiary?

A qualified beneficiary is a person covered under the plan immediately prior to the qualifying event and who is:

• The spouse or dependent child of a covered employee
• A covered employee

What is a Qualifying Event?

An event is considered a qualifying event under COBRA, when it results in a loss of group health plan coverage.

Qualifying events with respect to an employee who is a "qualified beneficiary" are:

• Termination of employment (for reasons other than gross misconduct)
• Reduction in hours of employment for covered employee

Qualifying events with respect to an employee’s spouse or dependent:

• Termination of the employee’s employment (for reasons other than gross misconduct)
• Reduction in hours of employment for covered employee
• Death of the covered employee
• Divorce or legal separation from the covered employee
• Employee’s entitlement to Medicare
• Employer’s commencement of bankruptcy proceeding under Title 11 of the US Code
• Dependent child of covered employee ceases to be a covered dependent under the terms of the plan.

What events are not considered qualifying events?

• If an employer terminates a group health plan or amends it to reduce coverage
• If an employer replaces one insured health plan, or insurance carrier, with a less generous plan
• Tendering a resignation; the triggering event is the actual termination
• Filing for divorce; the entry of the divorce decree is the triggering event (if legal separation precedes the divorce and results in a loss of coverage, the legal separation becomes the triggering event.)
• Employee drops coverage for spouse or dependents
• Employee’s resignation from Union, where Union provides coverage
• Termination of employment after insurer cancels group health plan

If I quit my job, will I be covered by COBRA?

Yes, except in the instance of gross misconduct, it does not matter whether an employee voluntarily quits or was discharged from employment for purposes of COBRA.

If I terminate my employment, how can I expect to be notified?

Your employer will notify the plan administrator of the date and conditions for the separation to establish the qualifying event and beneficiaries. The plan administrator will then provide the qualified beneficiaries with notice of COBRA rights. You do not need to contact the plan administrator for notification as it is your employer’s responsibility to do so.

Under what circumstances would an employer not be able to detect a qualifying event?

When the information is uniquely in the control of a qualified beneficiary, COBRA places the responsibility of notification of the event to the plan administrator, with the covered employee or qualified beneficiary (such as divorce or legal separation, or dependent child ceases to qualify under covered employee’s plan under plan terms).

In the event that my spouse or dependents are eligible for COBRA, how will they be notified?

The covered employee will need to notify their employer, usually the HR department, that an event has occurred. (i.e. divorce or legal separation, dependent child is no longer eligible to participate in plan, etc.) The employer will then notify the plan administrator as to the date and conditions to establish the qualifying event and beneficiaries. The plan administrator will then provide the qualified beneficiaries with notice of COBRA rights.

What is the period of time in which a Plan Administrator is to be notified of a qualifying event?

The employer of a covered employee, must notify the plan administrator within 30 days of the date of the following events, if the event results in the loss of group health plan coverage for:

• Death of the covered employee (includes retirees)
• Termination of employment of covered employment (except for gross misconduct)
• Reduction in hours of covered employee’s employment
• Covered employee’s entitlement to Medicare
• Employer’s bankruptcy

When must the Plan Administrator notify the affected qualified beneficiaries?

The Plan Administrator has 14 days from the date of notification from the employer of the qualifying event within which to notify the affected qualified beneficiaries. If the Plan Administrator is also the employer, the DOL (Department of Labor) has determined that the plan administrator (employer in this case) still has the benefit of the 44-day notice period, from the date of the qualifying event.

Who is the Plan Administrator?

The Plan Administrator is typically the person or firm elected by the employer to manage or provide administration services for COBRA benefits. This may be the employer, an employee of the employer, or a third party administrator hired by the employer to perform this function. This information is available from the employer.

What information will I (or qualified beneficiaries) receive if eligible for COBRA?

Within the notification period established by COBRA, the Plan Administrator will provide qualified beneficiaries with a notice of COBRA rights. This notice includes information for all affected qualified beneficiaries (i.e. covered employee, spouse or dependents).

The initial notice is considered to be sufficient if it contains information that adequately communicates the coverage the qualified beneficiary is entitled to receive. This notice must also include a disclosed amount that the employee (or qualified beneficiary) is required to pay in order to maintain coverage and information sufficient to enable the qualified beneficiary to make an informed decision whether to elect continuation coverage.

Notifications are considered to have met COBRA requirements when sent by first class mail to the last known address for the covered employee. This is considered a "good faith" effort to reach the qualified beneficiary. Other methods of delivery are not prohibited, for example an employer may deliver notification by hand during an exit interview.

How much time do I (or qualified beneficiaries) have to elect COBRA coverage?

A qualified beneficiary may elect COBRA coverage at any time within 60 days after the date plan coverage terminates, or if later, 60 days after the date of the notice to the qualified beneficiary from the Plan Administrator. Election of the benefit during this period provides for coverage retroactively to the date the group health coverage was terminated, and premiums are expected to be paid for the full period. Failure to elect COBRA coverage during the election period will likely cause the individual’s status as a qualified beneficiary to end.

Does each qualified beneficiary have independent election rights under COBRA?

Yes, COBRA allows that each qualified beneficiary be entitled to elect COBRA coverage. This means that some may elect and others may decline. Also, if there is a choice of the type of coverage allowed (usually happens during an open enrollment period), each qualified beneficiary is entitled to make a separate election.

Can the coverage change while under COBRA?

COBRA allows for the enrollment of COBRA participants during an enrollment period of the employer. The employer must make the same open enrollment rights available to each qualified beneficiary receiving coverage under COBRA. During this period, each qualified beneficiary will be able to choose to participate in available plans and add or eliminate coverage of family members.

Premiums may be subject to increase when the plan is renewed or changed by the plan sponsor (employer). Failure to elect COBRA coverage during the election period may cause the end of an individual’s status as a qualified beneficiary.

How is COBRA premium calculated?

Employers are not required to pay for coverage for employees, or their family members, under COBRA. This is true even if coverage was paid entirely by the employer prior to the qualifying event. COBRA allows the employer to charge 102% of the cost of coverage. In the case of a qualified beneficiary receiving 29 months of continuing coverage resulting from disability, the employer may charge 150% of the cost of coverage for the additional 11 months (over the original 18 months) of coverage.

How long is COBRA coverage available to a qualified beneficiary?

• Up to 18 months for covered employees, including their spouses and dependents, when the employee loses coverage because of a termination or reduction of hours.
• Up to 29 months for covered employees who are disabled at any time during the first 60 days of COBRA coverage (including the disabled employee’s non-disabled qualified beneficiaries).
• Up to 36 months for spouses and dependents facing a loss of employer-provided coverage due to an employee’s death, divorce, legal separation, or other certain qualifying events.

When are Premium payments due?

COBRA provides that qualified beneficiaries have 45 days from the date of the COBRA election to pay the initial premium and 30 days from the due date to pay all other monthly premiums. The due date is generally the first of the month, allowing for a payment to be received prior to the end of that month.

What happens if premiums are paid late?

Failure to pay premiums in a timely manner may cause a qualified beneficiary to lose COBRA coverage. A Plan Administrator is not legally required to advise the qualified beneficiary that he/she is late in paying COBRA premiums. If the qualified beneficiary’s premium is not paid by the expiration of the grace period, coverage terminates retroactively to the first day of the period for which timely premium payment was not made.

What happens if the qualified beneficiary is covered by another plan?

Basically, if an employee (qualified beneficiary) becomes eligible for another plan after electing COBRA, the COBRA coverage is terminated. If the qualified beneficiary had other coverage prior to the election of COBRA, (effectively a pre-existing plan) then the COBRA coverage may not be terminated because of the presence of the pre-existing coverage.

How do I stop COBRA?

Notify the Plan Administrator, in writing, of your desire to terminate COBRA coverage.

Where can I get information about my COBRA participation, payments or eligibility?

Contact your Plan Administrator; you should be able to find out who that is by asking your employer (or former employer).

If EBS is your Plan Administrator, you may contact EBS Customer Service, or an EBS COBRA administrator, Monday through Friday from 8:00 am to 5:00 pm, Pacific Standard time, at 800-229-7683 or locally at 925-460-3910. You may also contact us via e-mail at custserv@ebsbenefits.com.