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COBRA Continuation Coverage

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					COBRA Continuation Coverage
               Kathleen A. Harrison
            Resident Benefit Manager
     UB Office of Graduate Medical Education
                   May 11, 2011
Background
   What is COBRA Continuation Coverage and what does it do?

    ◦ Consolidated Omnibus Budget Reconciliation Act of 1986

    ◦ Provides temporary continuation of group health plan coverage that would otherwise
      end due to a life event known as a “qualifying event”

    ◦ Identical coverage and rights as those provided to other participants or beneficiaries
      covered under the Plan who are not receiving COBRA coverage

    ◦ Available for purchase at group rates plus a 2% administrative fee
Applicable Benefit Programs
   To which UMRS/UDRS group benefit programs does COBRA
    apply?


    ◦ Medical Benefits Program

    ◦ Dental Benefits Program

    ◦ Health Care Flexible Spending Account Program

       Available only to certain qualified beneficiaries and for a limited period
Eligibility
   Who is Eligible for COBRA?
    ◦ Qualified Beneficiaries who lose coverage as a result of a qualifying event are entitled to
      elect COBRA.

   Qualified Beneficiaries
    ◦ Qualified Beneficiaries include the following if he or she is covered under the group
      health benefit program on the day before the qualifying event:

        The covered employee

        The spouse of the covered employee (defined under Federal Law and/or the Plan)

        Each dependent child of a covered employee (as defined by the Plan)

    ◦ Domestic partners, same-sex spouses and non-dependent children are not eligible for
      COBRA coverage. Under the UMRS/UDRS group health plan, however, continuation
      coverage identical to that offered under COBRA is available for same-sex spouses
      provided they meet all other eligibility requirements.
Eligibility
   Qualified Beneficiaries Contd.
       A child born to, adopted by, or placed for adoption with a covered employee during a
        period of COBRA coverage is considered to be a qualified beneficiary provided that:

        ◦ the covered employee is a qualified beneficiary

        ◦ the covered employee has elected COBRA coverage for himself or herself

        ◦ the child satisfies the otherwise applicable Plan eligibility requirements (for example,
          regarding age).

       A child of the covered employee who is receiving benefits under the Plan pursuant to
        a qualified medical child support order (QMCSO) received by the Plan Administrator
        during the covered employee’s period of employment is a qualified beneficiary
Health Care Reform and COBRA Eligibility
   How does recent health care reform legislation affect COBRA
    eligibility?
    ◦ The Patient Protection and Affordable Care Act (PPACA) as amended by the Health Care and
      Education Reconciliation Act requires group health plans to extend dependent children eligibility
      to age 26 effective with the first plan year renewal that begins on or after September 23,
      2010. For the UMRS/UDRS group health plan, this effective date is July 1, 2011.

    ◦ Plan participants who terminate coverage before July 1, 2011 will be able to enroll their
      dependent children ages 20-26 in the plan under the special enrollment rule, provided the
      participant also enrolls for COBRA.

    ◦ Unlike the dependent children who were covered under the plan prior to the employee’s
      termination of employment, these dependent children would not be considered qualified
      beneficiaries with independent rights to elect COBRA.

    ◦ Because these dependent children would not be considered qualified beneficiaries, they would
      also not be eligible to extend COBRA through a second qualifying event, such as a subsequent
      divorce or death of the former employee parent.
Qualifying Events
   What is a COBRA Qualifying Event?
       COBRA qualifying events are certain events that would cause an individual to lose
        health coverage. The type of qualifying event will determine who the qualified
        beneficiaries are, plan notification requirements and the amount of time that a plan
        must offer the health coverage to them under COBRA.

       COBRA qualifying events for employees are:

        ◦ Voluntary or involuntary termination of employment for reasons other than gross
           misconduct

        ◦ Reduction in the number of hours of employment
Qualifying Events
   COBRA Qualifying Events Contd.
       COBRA qualifying events for spouses are:

        ◦ Voluntary or involuntary termination of the covered employee’s employment for reasons
          other than gross misconduct

        ◦ Reduction in the hours worked by the covered employee

        ◦ Covered employee’s becoming entitled to Medicare

        ◦ Divorce or legal separation from the covered employee

        ◦ Death of the covered employee

       COBRA qualifying events for dependent children are the same as for spouses with
        one addition:

        ◦ Loss of dependent child status under the plan rules
COBRA Benefits
   Under COBRA, what benefits must be covered?
    ◦ Qualified beneficiaries must be offered coverage identical to that available to similarly
      situated beneficiaries who are not receiving COBRA coverage under the plan. Generally
      this is the same coverage that the qualified beneficiary had immediately before
      qualifying for continuation coverage.

    ◦ Any change in benefits under the plan for active employees will also apply to qualified
      beneficiaries.

    ◦ Qualified beneficiaries must be allowed to make the same choices given to non-COBRA
      beneficiaries under the plan, such as open enrollment and special enrollment rights.
Duration of COBRA Coverage
   How long does COBRA coverage last?

    ◦ The maximum coverage period is 18 months if the qualifying event is:

       Termination of the employee’s employment

       Reduction in the employee’s hours

    ◦ The maximum coverage period is 36 months if the qualifying event is:

       Death of Employee

       Divorce

       Cessation of dependent child status

    ◦ For Health Care FSA’s, the maximum coverage period is through the end of the plan
      year during which the election was made.
Duration of COBRA Coverage
   Under what circumstances can COBRA coverage be
    extended?
    ◦ Extension due to disability

        If a qualified beneficiary is determined by the Social Security Administration to be disabled
         and the COBRA Administrator is notified of the disability in a timely fashion, all qualified
         beneficiaries may be entitled to receive up to an additional 11 months of COBRA coverage,
         for a total maximum of 29 months.

        This extension is available only for qualified beneficiaries who are receiving COBRA coverage
         because of a qualifying event that was the covered employee’s termination of employment
         or reduction of hours.

        In order to qualify for this extension, the disability must have started at some time before
         the 61st day after the covered employee’s termination of employment or reduction of hours
         and must last at least until the end of the period of COBRA coverage that would be available
         without the disability extension (generally 18 months, as described above).

        Each qualified beneficiary who has elected COBRA coverage will be entitled to the disability
         extension if one of them qualifies.
Duration of COBRA Coverage
 ◦ Extension due to covered employee’s Medicare eligibility

     If an employee becomes entitled to Medicare benefits less than 18 months before the date
      of the qualifying event (i.e. termination of employment) COBRA coverage for qualified
      beneficiaries (other than the employee) who lose coverage as a result of that qualifying
      event can last until up to 36 months after the date of Medicare entitlement.

 ◦ Extension due to occurrence of a second qualifying event

     An extension of coverage will be available to spouses and dependent children who are
      receiving COBRA coverage if a second qualifying event occurs during the 18 months (or, in
      the case of a disability extension, the 29 months) following the covered employee’s
      termination of employment or reduction of hours.

     The maximum amount of COBRA coverage available when a second qualifying event occurs
      is 36 months.

 ◦ Notice Procedures

     All extensions of COBRA coverage are subject to notice procedures as outlined in the
      Important Information About Your Coverage Rights section of the initial COBRA mailing.
Early Termination of COBRA Coverage
   Under what circumstances will my COBRA coverage
    terminate prior to the end of the maximum coverage period?
    ◦ COBRA coverage will automatically terminate before the end of the maximum period if:
       any required premium is not paid in full on time

       a qualified beneficiary becomes covered, after electing COBRA, under any other group health
        plan that is not maintained by the employer and does not contain any exclusion or limitation
        with respect to any pre-existing condition of such beneficiary

       a qualified beneficiary becomes entitled to Medicare benefits (under Part A, Part B, or both) after
        electing COBRA

       the employer ceases to provide any group health plan for its employees

       during a disability extension period, the disabled qualified beneficiary is determined by the
        Social Security Administration to be no longer disabled (COBRA coverage for all qualified
        beneficiaries, not just the disabled qualified beneficiary, will terminate)

       for any reason the Plan would terminate coverage of a participant or beneficiary not receiving
        COBRA coverage (such as fraud)
Electing COBRA Coverage
   How do I elect COBRA coverage?
    ◦ To elect COBRA, you must complete the appropriate Election Form included in your
      COBRA mailing according to the directions in the mailing and deliver it to the COBRA
      Administrator by the date specified in your COBRA mailing.

    ◦ Under federal law, qualified beneficiaries have 60 days after the date of the COBRA
      notice (or, if later, 60 days after the date group health program coverage is lost) to
      decide whether they want to elect COBRA coverage under the Plan.

    ◦ COBRA is elected on the date your Election Form is postmarked, if mailed, or the date
      your Election Form is received by the individual at the address specified for delivery of
      the Election Form, if hand-delivered.

    ◦ Election forms must be mailed or hand-delivered. Oral communications regarding
      COBRA coverage, including in-person or telephone statements about an individual’s
      COBRA coverage will not preserve COBRA rights. Electronic (e-mailed) communications
      are not acceptable.
Electing COBRA Coverage
   How do I elect COBRA coverage? cont’d.
    ◦ If a completed COBRA Election Form is not postmarked or hand delivered within the 60
      day time frame, all rights to elect COBRA continuation coverage are lost.

    ◦ If COBRA continuation coverage is rejected before the due date, a qualified beneficiary
      may change his/her mind as long as a completed COBRA Election Form is furnished
      before the due date. However, if a qualified beneficiary changes his/her mind after first
      rejecting COBRA continuation coverage, the COBRA continuation coverage will begin on
      the date the completed Election Form is furnished.

    ◦ Each qualified beneficiary has a separate right to elect COBRA.

    ◦ COBRA may be elected for only one, several, or for all dependent children who are
      qualified beneficiaries.
Paying for COBRA Coverage
   How much does COBRA cost?
    ◦ Current monthly premiums (through June 30, 2010) are as follows:

       Medical POS Plan (in WNY)
         ◦   UMRS Single: $381.00        UMRS Family: $949.00
         ◦   UDRS Single: $384.00        UDRS Family: $958.00


       Medical PPO Plan (outside WNY)
         ◦   UMRS Single: $612.00        UMRS Family: $1,549.00
         ◦   UDRS Single: $1,211.00      UDRS Family: $3,107.00


       Dental Plan
         ◦   UMRS Single: $21.00         UMRS Family: $47.00
         ◦   UDRS Single: $13.00         UDRS Family: $28.00


       Health Care FSA
         ◦   Current monthly contribution + 2% (post tax)
Paying for COBRA Coverage
   How much does COBRA cost? cont’d
    ◦ 2011-2012 monthly premiums (July 1, 2011 through June 30, 2012) are as follows:

       Medical POS Plan (in WNY)
         ◦   UMRS Single: $380.00        UMRS Family: $957.00
         ◦   UDRS Single: $395.00        UDRS Family: $997.00


       Medical PPO Plan (outside WNY)
         ◦   UMRS Single: $636.00        UMRS Family: $1,623.00
         ◦   UDRS Single: $1,184.00      UDRS Family: $3,048.00


       Dental Plan
         ◦   UMRS Single: $22.00         UMRS Family: $50.00
         ◦   UDRS Single: $12.00         UDRS Family: $27.00


       Health Care FSA
         ◦   Current monthly contribution + 2% (post tax)
Paying for COBRA Coverage
   When and how must the first payment for COBRA coverage
    be made?
    ◦ If COBRA is elected, qualified beneficiaries are not required to send any payment with
      the Election Form.

    ◦ The first payment for COBRA coverage must be made no later than 45 days after the
      date of the election.
          This is the date your Election Form is postmarked, if mailed, or the date your Election Form is received by the
           individual at the address specified for delivery of the Election Form, if hand-delivered

          If the first payment for COBRA coverage is not made in full within 45 days after the date of the election, all
           qualified beneficiaries for whom COBRA coverage was elected will lose all COBRA rights

    ◦ The first payment must cover the cost of COBRA coverage from the time the coverage
      under the Plan would have otherwise terminated up through the end of the month
      before the month in which you make your first payment.
          Qualified beneficiaries are responsible for making sure the amount of their first payment is correct
Paying for COBRA Coverage
   When and how must subsequent payments for COBRA
    coverage be made?
    ◦ After the first payment for COBRA coverage is made, qualified beneficiaries will be
      required to make monthly payments for each subsequent month of COBRA coverage
      based on the monthly premium information provided.

    ◦ Each monthly payment for COBRA coverage is due on the first day of the month for
      that month’s COBRA coverage.

    ◦ The COBRA Administrator is not required to and will not send periodic notices of
      payments due for these coverage periods; it is the qualified beneficiary’s responsibility
      to pay the COBRA premiums on time.

    ◦ All COBRA premiums must be paid by check or money order payable to UMRS or UDRS.
Paying for COBRA Coverage
   Are there grace periods for monthly payments?
    ◦ Although monthly payments are due on the first day of each month of COBRA coverage,
      a grace period of 30 days is given after the first day of the month to make each
      monthly payment.

    ◦ COBRA coverage will be provided for each month as long as payment for that month is
      made before the end of the grace period for that payment.

    ◦ If a monthly payment is made later than the first day of the month to which it applies,
      but before the end of the grace period for the month, coverage under the group health
      benefit program may be suspended as of the first day of the month and then
      retroactively reinstated when the monthly payment is received.

    ◦ If a monthly payment is not made before the end of the grace period for that month, all
      rights to COBRA coverage under the Plan will be lost.
Paying for COBRA Coverage
   Are there grace periods for monthly payments? cont’d
    ◦ If mailed, payments are considered to have been made on the date that the payment is
      postmarked. If hand-delivered, payments are considered to have been made when the
      payment is received by the COBRA Administrator.

    ◦ Payment will not be considered to have been made by mailing or hand delivering a
      check if your check is returned due to insufficient funds, an incorrect payee, or
      otherwise.

    ◦ Payment will not be considered to have been made by mailing or hand delivering a
      check or money order if your check or money order is not made in the full monthly
      premium amount until the balance of that monthly premium is received and only if the
      balance is received within the allotted grace period for that payment.

    ◦ Qualified beneficiaries are permitted to make payments in half month increments in the
      first and last months of coverage only if they begin coverage on the 16 th of the month
      and/or terminate coverage on the 15th of the month.
Special Considerations
   What are some special considerations in deciding whether to
    elect COBRA?
    ◦ In considering whether to elect COBRA, you should take into account that a failure to
      elect COBRA will affect your future rights under federal law in the following important
      respects:

        You can lose the right to avoid having pre-existing condition exclusions applied to you by
         other group health plans if you have more than a 63-day gap in health coverage

        You may lose the guaranteed right to purchase individual health insurance policies that do
         not impose such preexisting condition exclusions if you do not get COBRA coverage for the
         maximum time available to you

        Your special enrollment rights under federal law
Special Considerations
   What information will I need from prospective employers to
    help in my decision of whether to purchase COBRA coverage?
    ◦ Will my new employer offer an employee benefit package?

    ◦ Are both medical and dental coverage included in the employee benefit package?

    ◦ Will my employer impose a waiting period after the start of employment before employee
      benefits take effect and if so what is the duration of the waiting period?

    ◦ Will my new employer’s health care plan contain pre-existing condition exclusions?

    ◦ Will my new employer’s health care plan meet my needs?
Other Health Care Options
   If I choose not to elect COBRA, what other options do I have?
       Coverage through a new employer

       Coverage through a spouse’s employer
        ◦ Be aware of special enrollment rights and notification requirements

        ◦ COBRA mailing can be used as proof of loss of coverage

        ◦ Certificate of coverage will be provided by the carrier once notification of termination has been received and
          processed

       Coverage purchased independently
        ◦ Importance of plan understanding

        ◦ Weigh cost vs. coverage

       No coverage
Important Reminder
   Remember to keep the Plan notified of your current address
    and contact information
    ◦ Receipt of COBRA information packet

    ◦ Accessibility while enrolled

    ◦ Carrier Communications

    ◦ 2011 W2
Thank You

				
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