FAQ
1. Who is entitled to benefits under COBRA?
There are three
elements to qualifying for COBRA benefits. COBRA establishes specific
criteria for plans, qualified beneficiaries, and qualifying events:
Plan Coverage
Group health plans for employers
with 20 or more employees on more than 50 percent of its typical business days
in the previous calendar year are subject to COBRA. Both full and
part-time employees are counted to determine whether a plan is subject to
COBRA. Each part-time employee counts as a fraction of an employee, with
the fraction equal to the number of hours that the part-time employee worked
divided by the hours an employee must work to be considered full-time.
Qualified Beneficiaries
A qualified beneficiary generally is
an individual covered by a group health plan on the day before a qualifying
event who is either an employee, the employee's spouse, or an employee's
dependent child. In certain cases, a retired employee, the retired
employee's spouse, and the retired employee's dependent children may be
qualified beneficiaries. In addition, any child born to or placed for
adoption with a covered employee during the period of COBRA coverage is
considered a qualified beneficiary. Agents, independent contractors, and
directors who participate in the group health plan may also be qualified
beneficiaries.
Qualifying Events
"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
and the amount of time that a plan must offer the health coverage to them under
COBRA. A plan, at its discretion, may provide longer periods of
continuation coverage.
Qualifying Events for Employees
- Voluntary or involuntary termination of
employment for reasons other than gross misconduct
- Reduction in the number of hours of employment
Qualifying Events for Spouses
- Voluntary or involuntary termination of the
covered employee's employment for any reason other than gross misconduct
- Reduction in the hours worked by the covered
employee
- Covered employee's becoming entitled to Medicare
- Divorce or legal separation of the covered
employee
- Death of the covered employee
Qualifying Events for Dependent Children (same as for spouses with
one addition)
- Loss of dependent child status under the plan
rules
2.
What is the Health Insurance Portability and
Accountability Act of 1996 (HIPAA)?
HIPAA amended the Employee
Retirement Income Security Act (ERISA), to provide new rights and protections
for participants and beneficiaries in group health plans. Understanding
this amendment is important to your decisions about future health coverage.
HIPAA contains protections both for health coverage offered in connection with
employment ("group health plans") and for individual insurance
policies sold by insurance companies ("individual policies").
If you find a new job that offers
health coverage, or if you are eligible for coverage under a family member's
employment-based plan, HIPAA includes protections for coverage under group
health plans that:
-
Limit exclusions for preexisting conditions
-
Prohibit discrimination against employees and dependents based on
their health status
-
Allow a special opportunity to enroll in a new plan to individuals
in certain circumstances
If you choose to apply for an
individual policy for yourself or your family, HIPAA includes protections for
individual policies that:
-
Guarantee access to individual policies for people who qualify
-
Guarantee renewal of individual policies
