Benefits: COBRA
Continuation Coverage Requirements
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law that applies to organizations that employ 20 or more people and sponsor a group health plan. Group health plans include medical, dental, and vision care.
The law requires employers to offer qualified beneficiaries who lose their health coverage under certain circumstances the opportunity to extend that coverage. A qualified beneficiary is an individual who was covered by the health plan on the day before a qualifying event caused coverage to be lost. Therefore, a qualified beneficiary can be an active employee, a former employee, and an employee's spouse or dependent children.
Qualifying events may include reduction of hours or termination of employment, legal separation or divorce, Medicare entitlement, and dependent status.
Download a PDF (44K) of a quick-reference COBRA Continuation Coverage Summary.
You and your health plan carrier should identify who is responsible for your organization's COBRA administration and communication procedures. Failure to comply with any of these COBRA notification requirements may result in fines up to $110 a day.
When Participation Begins
The plan administrator must furnish a general notice to each new qualified beneficiary within the first 90 days of coverage under a health plan. The general notice informs participants of what COBRA Continuation Coverage is, when it is available, and how it is provided.
Download, save, customize and print this MS Word (48K) model COBRA 2005 General Notice.
When Coverage Ends
The plan administrator must provide a COBRA election notice to each qualified beneficiary within 14 days after receiving a qualifying event notice. This includes when coverage ends because the employee terminates either voluntarily or involuntarily. But other qualifying events also require you send an election notice.
This notice describes the qualified beneficiary’s right to elect COBRA coverage, the available health plan options, premium payment requirements, the consequences of failing to elect COBRA coverage, and how COBRA coverage could be extended due to a disability or second qualifying event.
Download, save, customize and print this MS Word (108K) model COBRA 2005 Election Notice.
When Continuation Coverage Is Rejected Because of Ineligibility
When individuals erroneously file a notice of a qualifying event, the plan administrator must notify them of the reason they aren't entitled to elect COBRA coverage. This notification must be provided within 14 days after receiving a purported qualifying event notice. The administrator must furnish the ineligibility notice regardless of the reason for denying coverage. This applies to a first or second qualifying event or a request for a disability extension.
Download, save, customize and print this MS Word (48K) model COBRA 2005 Rejection Notice.
When Continuation Coverage Is Terminated Early
The plan administrator must notify qualified beneficiaries if their coverage will be terminated before the end of the maximum continuation coverage period. This notice must be furnished "as soon as practicable."
Download, save, customize and print this MS Word (44K) model COBRA 2005 Early Termination Notice.
Disclaimer
This material was developed for use by State and Local Association Executives. Some of the information may not be applicable to other audiences. This guide is intended to provide accurate and authoritative information with regard to the subject matter covered. Although every effort has been made to ensure the accuracy and completeness of this information, the authors and editors of this guide cannot be responsible for any errors or omissions. This guide is not a substitute for legal or technical advice. Associations that need legal or technical advice should obtain opinions from their own legal or technical advisors.
Consulting Services Available from NAR Human Resources
Fee-based consulting services are available from NAR's Human Resources Department. For more information, contact Donna Garcia, Director Human Resource Services, at dgarcia@realtors.org, (312) 329-8311.
