10min
COBRA coverage may vary depending on the type of qualifying event. Know the difference.
Dr. Seuss once famously said, “Sometimes you will never know the value of a moment until it becomes a memory.” As is the case with precious moments, most people don’t realize how important health insurance is until it’s gone.
That said, one of the most stressful times for any employee is the loss of their health insurance. It also creates pressure for whoever is handling the company’s benefits administration if they need to comply with the Consolidated Omnibus Budget Reconciliation Act (COBRA) and temporarily extend group health coverage to the effected employee. Many companies choose to outsource COBRA administration because of the complexities and potential penalties associated with non-compliance.
COBRA Timelines: Qualifying Events and Coverage
Depending on the type of COBRA Qualifying Event, the COBRA timeline or coverage periods for an employee can vary from 18-36 months. The individual handling benefits administration within a company needs to keep track of qualifying events and issue COBRA eligibility notices so that the employee can resume their coverage.
Below is a table that outlines the type of qualifying event and their corresponding coverage period or timeline. Note that if an additional qualifying event below occurs, the coverage period can be extended by another 18 months:
| Qualifying Events | Coverage Periods / Timelines |
|---|---|
| Reduction in hours | 18 months* |
| Voluntary/involuntary termination (except for gross misconduct) | 18 months* |
| Covered employee becomes entitled to Medicare | 36 months for spouse and dependents |
| Death of a covered employee | 36 months for spouse and dependents |
| Divorce or legal separation from a covered employee’s spouse | 36 months for spouse and dependents |
| Dependent child loses dependent status | 36 months for dependent |
As the table shows, the length COBRA coverage is dependent upon the reason for the qualifying event. Qualified beneficiaries of COBRA aren’t just limited to employees or ex-employees. In many cases, it may be a spouse or dependent of that individual, which leaves the individual administering benefits with the burden of providing access to benefits for people that were never employed with the company.
Learn more about COBRA eligibility and qualifying events.
For companies handling COBRA administration in-house, they need to track these COBRA coverage periods, so coverage is not provided to the beneficiary longer than it needs to be or for less time than it needs to be. Utilizing the right COBRA solution can help monitor for specific COBRA qualifying events and keep the group plan sponsor compliant with COBRA regulations.
COBRA Notices Types and Required Timing
Aside from managing COBRA coverage periods, the benefits administrator also need to be on top of communication with both employees and COBRA qualified beneficiaries. This involves everything from sending out the initial notice upon enrollment to letting employees and their dependents know their rights if they ever have a qualifying event to following up with the beneficiaries regarding late payments.
Below is a chart which explains the different types of notices or communication that has to happen, and their required timelines:
|
Notice Type |
Notice Reason |
Timing |
|---|---|---|
|
Initial Notice |
Informs an employee and their dependents, if applicable, of their rights under COBRA |
Within 90 days of becoming a participant for new enrollments and life change events (e.g. marriage). |
|
Election Notice (1) |
Informs a COBRA qualified beneficiary of their right to elect continued group coverage. |
Within 44 days of qualifying event (e.g. termination, loss of hours, death of employee, or entitlement to Medicare events). |
|
Election Notice (2) |
Informs a COBRA qualified beneficiary of their right to elect continued group coverage. |
Within 74 days of qualifying event (e.g. divorce, legal separation, or loss of dependent status). |
|
Beneficiary Election |
Informs administrator that beneficiary will elect COBRA coverage |
Within 60 days of the receipt of election notice. |
|
Late Notice |
Informs COBRA qualified beneficiary that the premium is late |
Within 15 days after the premium due date |
|
Partial Payment |
Informs COBRA qualified beneficiary that the premium is only partially paid |
Not specified |
|
Termination Notice |
Informs administrator that COBRA qualified beneficiary is terminating coverage |
Not specified |
|
Early Termination Notice |
Informs COBRA qualified beneficiary that coverage will be terminated |
“As soon as practical” |
|
Unavailability of COBRA |
Informs a COBRA qualified beneficiary that their request for coverage or an extension of coverage is denied. |
Within 14 days of request. |
Can This Be Better Managed?
Looking at the two charts above shows us why it’s no wonder businesses are looking for an easy way to handle their COBRA administration. An individual administering benefits already has enough to worry about with existing employees, why not make COBRA administration easy?
Taking advantage of automated COBRA Administration software can improve outcomes, simplify reporting, prevent businesses from missing important deadlines or getting non-compliance penalties. The right tools can automatically deliver notifications to beneficiaries and take care of all the administration.
To learn about EverythingBenefits' COBRA Administration solution, download our Solution Guide and Case Study or get in touch with our team at bizdev@everythingbenefits.com
