COBRA - - Federal & Cal-COBRA
CLICK HERE
for an Overview of the "Patient Protection and Affordable Care Act of
2010", better known as "Obamacare" and other Health
Care Reforms.
The
Department of Labor (DOL) has an online resource called the "elaws
- Health Benefits Advisor" (see link below) where employers can more
fully understand and learn how to better comply with the requirements of
COBRA & HIPAA.
COBRA & HIPAA Laws are
subject to regular amendments; therefore, for the most up to date information
please refer to the following online resources and your own counsel:
The
following link opens a PDF file covering the Federal COBRA Law as provided by the US Dept.
of Labor. You will need Acrobat Reader 3.0, or higher, to read this file
(click HERE
first to download a free copy of Adobe Acrobat Reader that reads all PDF
files).
US
DEPARTMENT OF LABOR - COBRA FILE
DOL REPORTING & DISCLOSURE GUIDE INCLUDES COBRA
INFORMATION
The U.S. Department of Labor (DOL) issued a reporting and
disclosure guide for employee benefit plans that
assists employers, plan sponsors, service providers and other plan officials in
meeting their obligations under the Employee Retirement Income Security Act (ERISA).
For the first time, the guide includes information on documents that group
health plans must provide to participants, including those covered under the
Consolidated Omnibus Budget & Reconciliation Act (COBRA). Documents of
particular interest to COBRA administrators are listed below.
-
Initial (or general) COBRA Notice
-
COBRA Election Notice
-
Summary Plan Description
-
Summary of Material Modification
-
Certificate of Creditable Coverage
-
Medical Child Support Order
-
National Medical Support Notice
The Reporting and Disclosure Guide for Employee Benefit Plans is
available from the DOL by calling 866-444-3272 or on the web at:
www.dol.gov/ebsa/pdf/rdguide.pdf.
COBRA,
and Cal-COBRA, mainly address the rights of employees and their
dependents to continue employer sponsored Group Health Insurance Benefits
following termination and/or other "Qualifying Events". The difference
between the two has to do with slightly differing responsibilities of the
employer, where the federal Law applies to employer groups of 20+, and Cal-COBRA
to smaller sized groups of 2-19 employees. Federal COBRA requires the employer
to provide not only the initial Notice of COBRA Rights, but also the Election
Notice and premium collection functions, whereas Cal-COBRA transfers the latter
requirements to the Insurer.
California
also offers additional extensions beyond the typical 18 months of COBRA for
subscribers and legally married spouses, however, the following conditions
apply:
-
subscriber
has worked for the employer at least 5 years prior to termination
-
is
60 years old or older on date employment ends, but still under age 65
-
subscriber
is entitled to and elects COBRA, Cal-COBRA
-
subscriber
is not covered under any other group plan not maintained by the employer
or former employer even if that coverage is of lesser value
Additionally,
California Insurers offer what is referred to as "California
Continuation COBRA" for former employees and their dependents,
including divorced or surviving spouses, that can continue COBRA coverage for up
to 5 continuous years upon exhaustion of COBRA or Cal-COBRA, and regardless of
the age or length of employment of the subscriber; however, premiums are higher
with the extended coverage (as much as 213% higher). The following
conditions apply:
It
is the employers responsibility to notify qualifying subscribers 90 days prior
to the end of COBRA benefits, and the employee then has 30 calendar days prior
to the date that COBRA or Cal-COBRA ends, to notify the Insurer of their
intention to enroll, at which time most Insurers would take over the
responsibility for the billing and collection of premiums. The following
"termination conditions" apply:
-
member
reaches age 65
-
member
becomes covered under another group health plan
-
member
becomes eligible for Medicare
-
former
employer terminates its contract with the same Insurer
-
member
fails to pay premiums as billed
-
the
spouse or surviving spouse exhausts their 5 continuous years of
"California Continuation COBRA"
Assembly Bill 1401 - Extends COBRA &
Cal-COBRA Coverage
Assembly Bill 1401 was signed into law September 2002 making changes to the
length of COBRA and Cal-COBRA coverage, California Conversion Plans, HIPAA
Continuation of Coverage rules, and to the State's MRMIP Program.
One item in particular that should receive special
attention…AB1401 will require plans and insurers to offer health benefit
coverage to certain individuals. The bill, would revise coverage requirements
for converted policies and would also require a health care service plan and a
health insurer to offer specified individuals who begin receiving continuation
coverage on or after January 1, 2003, and who have exhausted their continuation
coverage under federal continuation coverage provisions, an opportunity to extend
the term of their coverage to 36 months. The bill would also extend continuation
coverage for specified individuals under Cal-COBRA to 36 months.
To view AB 1401 in its entirety, please -
CLICK
HERE
HIPAA
(the Health Insurance Portability & Accountability Act),
another such Law that followed COBRA Law in 1996, is a further "expansion
of COBRA"; however, it deals mainly with the issue of portability of health
coverage (i.e. the ability of an insured who has exhausted COBRA extended
benefits, to then be able to obtain replacement non-Group coverage, but on a
guaranteed issue basis, and regardless of negative health history). Click Here
for
HIPAA info.
Contents Within a Typical Employer COBRA Notice:
Note
that upon hire, an employee must be given a Notice informing them that they have
COBRA rights, and they must be given another Notice & Election Form upon a
"Qualifying Event" (QE). Understanding what is, and what is not
a "QE", and that these can be caused not only by employees but also by
changes in circumstances among their dependents, is critical to understanding
and controlling employer liabilities caused by compliance violations and
oversight surrounding COBRA matters.
-
First and Last Names of all
"Qualified Parties" (employee and dependents).
-
Date of
"Qualifying Event" (these can be caused by the actions of
employees as well as their dependents).
-
End of Qualifying Date
[(usually 18 months, or 36 months for dependents, and can be 29 months or
longer if disabled at time of QE) assuming no lapse due to non payment of
premiums].
-
Election Form - Plan benefits available (acceptance or declination-initial)
* Medical , Dental, Vision, Life, etc.
* Cost of each plan - Employers Contribution is 0% -Vs- what it was; Employee's Cost
is now 100% -Vs- what it was, and may also include an added Administrative
Fee (max
amount is 2% under Federal COBRA, or 10% under Cal-COBRA).
-
Payment Due Date each Month (detailed mailing and contact info for
timely payment).
-
Election Due Date
-
Coverage may be cancelled if payment not rec'd by _______
Date_____.
-
Plan design or plan changes
if any (provide copy of plans employee handbook)
-
Signature by
employee accepting or declining coverage and date.
IMPORTANT NOTE: LeagueFinancial.com partners with
several third party COBRA/HIPAA Administrators to manage compliance matters
for its
clients. We have found that the slightly added costs of these services are well worth the savings in
rather substantial
fines and penalties that, more often than not, most employers incur due to lack
of a complete understanding of such compliance matters.
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Disclaimer: The material discussed
herein
is meant for general illustration or informational purposes only and is
not to be construed as investment advice. Although the information has been gathered from sources believed to
be reliable, it is not guaranteed. Please note that individual situations
can vary; therefore, the information contained herein should be relied upon only when
coordinated with individual professional advice. We are not licensed for
and therefore do not provide tax or legal advice.
