- What is COBRA?
- COBRA packet.
- Coverage options for COBRA participants.
- Effective dates of COBRA coverage.
- Length of COBRA continuation of coverage periods.
- COBRA premiums.
- Timeline for COBRA enrollment.
- COBRA checklist.
What is COBRA?
COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985. In response to concerns regarding the loss of employer-sponsored group health, dental or vision insurance, Congress set rules that allow qualified employees and dependents to continue group insurance under certain conditions and for limited periods of time.
The term COBRA is used to refer to a type of member eligibility status and not a particular plan. When an employee and/or eligible dependents qualify to continue coverage under COBRA, they can continue health, dental and/or vision coverage for a limited time period.
A qualified beneficiary is defined as a covered employee, their spouse (or former spouse) and dependent children who are covered under the group plan the day before the qualifying event. Federal COBRA rules state that the option to continue coverage under COBRA must be offered to all QBs enrolled in health, dental and/or vision insurance coverage when employment is terminated or a dependent loses eligibility due to a qualifying event. COBRA must always be offered regardless of other options to continue coverage.
QBs can continue coverage under COBRA until they:
- Obtain other group insurance coverage that has no preexisting conditions, limitations or exclusions.
- Cancel the COBRA coverage.
- Exhaust the coverage continuation period.
- Fail to pay premiums.
An employee is eligible to continue coverage under COBRA if they have insurance coverage at least one day before a qualifying event occurs. Employees and dependents are not required to enroll under COBRA. It is up to each QB to decide if continuing coverage under COBRA is the right option for them.
Importance of documenting the COBRA process
You are responsible for notifying new employees and spouses of their rights under COBRA. The General Notice of COBRA Continuation Coverage Rights must be given to a new employee and also their spouse within 90 days of the coverage effective date. If you must mail the notice, send it first class. It can be included with the Summary of Benefits and Coverage.
You are required to complete various forms, meet numerous notification guidelines, and keep copies of signed forms in employees’ files, as well as a log of all COBRA mailings and hand deliveries.
You are responsible for sending a COBRA packet to an employee or dependent who becomes ineligible for coverage. A COBRA packet must include the following:
- A COBRA Continuation Coverage Election Form.
- An Eligibility for Continuation of Coverage form.
- A copy of Important Information about COBRA Continuation Coverage and Other Health Coverage Alternatives.
- A copy of the COBRA premium rates.
All COBRA materials are available on the IC webpage.
You must complete the COBRA Qualifying Event Notice and put it in the employee’s file. If the QB returns a completed COBRA Continuation Coverage Election Form to you, forward both the COBRA Qualifying Event Notice and the COBRA Continuation Coverage Election Form to EGID. Keep a copy of both forms in the employee’s file.
If a dependent who loses eligibility does not reside with the employee, a packet must be sent to the dependent’s last known address. Be aware that failure to notify an employee’s qualified dependents of their COBRA rights is a common and potentially costly mistake.
Even if an employee is eligible to retire or vest, you must always mail a COBRA packet to all qualified beneficiaries; however, an employee who chooses to retire or vest should be instructed to disregard the COBRA packet and instead complete an Application for Retiree/Vested/Non-Vested/Defer Insurance Coverage. A retired/vested member can continue health, dental, vision and/or life insurance coverage indefinitely as long as premiums are paid.
If a COBRA packet is returned for an incorrect address and you can locate the QB’s new address, mail a copy of the original packet (do not re-date it) within the 60-day COBRA election period and document the date it is remailed. If no other address is available or the packet is again returned, attach the returned mail forms to the COBRA Qualifying Event Notice. Keep the returned COBRA packet on file.
Coverage options for COBRA participants
Electing COBRA does not allow a change in plans, except when a QB moves outside, or worked but never lived in, their health plan’s service area. Plan changes can also be made during the annual Option Period.
A QB can continue health, dental and/or vision coverage in effect at the time of the qualifying event.
If a QB was not enrolled in health, dental and/or vision coverage, it can be added during the next annual Option Period.
Effective dates of COBRA coverage
COBRA coverage begins the first day after active coverage ends (no lapse in coverage is allowed). Enrollment is processed after EGID receives the first full premium payment, COBRA Qualifying Event Notice and COBRA Election Form.
Length of COBRA continuation of coverage periods
A COBRA continuation period of up to 18 months is available to employees and dependents who lose coverage due to one of the following qualifying events:
- Termination of employment, whether voluntary or involuntary (except for termination due to gross misconduct).
- Reduction in hours resulting in the loss of eligibility for coverage.
- Leave of absence.
- Reduction in force/strike/layoff.
A COBRA continuation period of up to 36 months is available to dependents who lose coverage due to one of the following qualifying events:
- Divorce or legal separation from the employee.
- Dependent child turns 26.
- Employee becomes Medicare eligible during an 18-month COBRA continuation period.
- Employee’s death.
NOTE: After an employee’s death, the covered spouse and dependents are also eligible to continue coverage as surviving dependents as long as premiums are paid.
A COBRA continuation period of up to 36 months is available to other dependent children who have coverage through an approved Application for Coverage for Other Dependent Children, or a tax return showing dependency. In addition to the qualifying events above, a qualifying event may also occur when one of these dependents:
- No longer resides with the member.
- Is no longer financially dependent on the member.
- Is no longer in the member’s care.
If a QB marries while on COBRA, they can add their new spouse and dependents to COBRA coverage within 30 days of their marriage, but only for the remainder of their established continuation period.
If a 36-month event occurs during an 18-month COBRA continuation period, a dependent QB can extend eligibility for a maximum of 36 months from the date of the original qualifying event. For example, if an employee and spouse divorce during their 17th month of COBRA coverage, the former spouse and covered dependents are eligible to continue coverage for an additional 19 months. The COBRA continuation period cannot exceed 36 months.
A QB who qualifies for Social Security disability benefits can extend coverage for up to 29 months. They must be disabled at the time of the qualifying event or become disabled within 60 days of the start of their COBRA continuation period. All covered QBs can continue coverage for up to 29 months or until their Medicare coverage becomes effective, whichever is earlier.
The QB must notify EGID within 30 days of a Social Security disability determination, or if it is determined they are no longer disabled. This determination reduces the COBRA continuation period.
Each QB has the right to continue coverage under COBRA and elect separate benefit options; e.g., an employee may elect to keep health and dental coverage under COBRA while their spouse may elect to keep only health coverage.
A QB is eligible to continue only the coverage they had in effect the day before the qualifying event. COBRA eligibility does not allow a QB to add benefits or change plans. Coverage or plan changes are allowed only during the annual Option Period.
When a QB gains other group health, dental or vision insurance during the COBRA continuation period, they must notify EGID, and COBRA coverage must be terminated for that benefit.
When a QB’s COBRA continuation period expires, they must seek other coverage unless they qualify for coverage as a dependent on a primary member’s plan through EGID.
Employees and dependents are not required to elect COBRA. It is up to each QB to decide if continuing coverage under COBRA is the right option.
NOTE: In the event a retiring or vesting employee elects COBRA, they forfeit their right to continue insurance coverage through EGID as a retired or vested member. When the COBRA continuation period ends, they are not eligible for further coverage through EGID.
COBRA premiums are categorized by member, spouse, child and children.
EGID policy states that for any benefit continued under COBRA, one person must always pay the primary member premium. In cases where a spouse, child or children are insured under a particular benefit and the member did not retain that coverage, one person is always billed the primary member rate.
All premiums from the effective date of coverage through the current month of coverage are due within 45 days of the QB’s signature on the COBRA Election Form. If a QB enrolls in coverage more than three months into the enrollment period, a payment plan may be set up for back payment of premiums. This will be determined on a case-by-case basis.
Premiums can be paid by check, bank draft or money order. Partial or cash payments are never accepted. Premiums for a COBRA dependent cannot be deducted from a current employee’s payroll check.
When an employer enrolls with EGID or merges with an EGID participating employer, they must use a COBRA to COBRA Form to enroll QBs who already participate in COBRA through their previous employer. Complete this form and include the QB’s name and Social Security number, as well as the effective date and end date of the original COBRA continuation period. COBRA-to-COBRA QBs can continue coverage only for the remainder of their original continuation period; e.g., a QB exhausted 12 months of COBRA coverage before enrollment through EGID; since their continuation period was 18 months, there are still six months of continuation coverage remaining.
If the employer terminates its group coverage through EGID, QBs must be offered COBRA continuation coverage through the new carrier. All coverage through EGID, including coverage for COBRA members, ends on the employer’s last day of coverage through EGID.
Timeline for COBRA enrollment
- Employee and/or dependent COBRA qualifying event
- QB has 30 days to notify their employer.
- IC has 14 days to send a COBRA packet to QB.
- QB has 60 days from the date of notice or the date of loss of coverage, whichever is later, to elect COBRA.
- QB has 45 days from the election date to pay full premiums directly to EGID. Premiums are billed retroactively to the last day of active coverage.
- Once EGID has all forms and premiums, insurance benefits activate.
Timeline for COBRA enrollment.PDF
When you receive notice of an employee’s or dependent’s COBRA qualifying event:
- Complete either the Insurance Change Form or Insurance Termination Form, whichever is appropriate.
- Enter the change in Employer Self-Service or send the form to EGID.
- Complete the COBRA Qualifying Event Notice and put it in the employee’s file.
- Mail a COBRA packet within 14 days by first class mail to the last known mailing address on file. Address the packet to all covered individuals, e.g., John and Mary Smith and Children. If the covered dependents do not live with the employee, mail a separate COBRA packet to each dependent.
- Keep a mailing and hand delivery log of all COBRA materials.
- If the COBRA packet is returned as non-deliverable, check your records for an updated address and mail the packet again. If no updated address is available, keep proof of the returned packet in the employee’s file. If a new mailing address becomes available, resend the original packet and log the information.
- When a QB returns the COBRA Election Form, verify it is still within the 60-day election period. Attach the COBRA Qualifying Event Notice to the COBRA Election Form and fax or mail them to EGID. Keep a copy of both forms in the employee’s file.
- If the QB sends the premium payment with the COBRA Election Form, make a photocopy of the payment for the employee’s file. Mail the payment with the COBRA forms to EGID.
NOTE: COBRA payments must be sent in full to EGID separately from the employer’s regular monthly premium payment to ensure proper credit to the QB’s account. Per EGID policy, cash payments are never accepted.
COBRA forms can be mailed or faxed to EGID at:
Employees Group Insurance Division
P.O. Box 58010
Oklahoma City, OK 73157-9010
Attention: Member Accounts