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COBRA

The legislative intent of COBRA was to bridge the gap created when employees were in transition between employment situations. Employees voluntarily or involuntarily terminated, laid-off, divorced or survivors of deceased employees typically lost their health coverage when the employment relationship ceased. In order to eliminate the exposure to medical bills incurred by such individuals being passed on to federal, state and local governments, Congress enacted COBRA. The law, it was anticipated, would shift the potential costs for medical bills away from the government and back to the private sector.

A qualified beneficiary (QB) is defined as anyone who is covered under the group health plan(s) of the Employer on the day before the event that is known as a "qualifying event." QBs could be any of the following, if they meet the criteria for being COBRA eligible:

QBs could be employee, employee spouse, employee dependent, retiree, partner, corporate director or independent contractor. If the independent contractor, partner or corporate director are not eligible for coverage under the group plan, then they are ineligible for COBRA election rights.

Federal and state governments are exempt from COBRA, as well as, employers that qualify as church groups are also exempt. Ineligible QBs are non-resident aliens with no US income, and individual who becomes covered under the medical plan of another QB, or an individual who elects Medicare benefits.

Qualifying events (QEs) are events which trigger the employee's rights to elect COBRA continuation.

COBRA benefits can be continued for a period of eighteen months by QBs, who are thereafter referred to as Continuants. Events such as employee's death, divorce or legal separation, dependent child, and medicare entitlement can allow the continuant up to thirty-six months of coverage where a secondary event occurs prior to the expiration of the initial eighteen month COBRA period.

COBRA continuation encompasses the employer's Group Health Plans that cover medical care. Group life and disability are excluded. Conversion from the group life and/or disability may be an option. Usually, the group life converts to a standard, smoker rated individual policy without requiring a physical or medical underwriting. However, it might be cost effective for healthy individual to consider purchasing a separate life policy, if they medically qualify for a better rated life insurance policy.

Core benefits are medical, medical and prescription; non-core benefits are dental and vision. QBs are allowed to accept the core and reject the non-core benefits. The employer can charge 102% of the applicable premium, and after 19-29 months, the rate allowed is 150% of the applicable premium for QBs under COBRA disability.

The employer or plan administration is not required to send a bill for premium to a COBRA QB or Continuant. An employer is considered to be in compliance with COBRA if it fails to bill for premiums. It is the responsibility of the QB or continuant to pay on a timely basis. The employer has 14 days form the date it knows of the qualifying event to notify all QBs of COBRA rights

If you are a New Jersey resident, you have a 90 day window from the date of termination of health coverage to purchase an individual health plan without being subject to pre-existing conditions. A pre-existing condition is an illness or accidental injury which occurs in the six months before your individual coverage begins and for which you see a doctor or take prescribed medication or treatment recommended by a doctor in the six months before your coverage starts. Or where an ordinarily prudent person would have sought medical advice, care or treatment in the six months before coverage begins.

For additional information on your insurance needs or information about our Financial Services, call 1-800-392-0980, complete the inquiry request form, or simply E-Mail us at: info@forefin.com.

Comments above are not intended to provide legal advice. Individuals seeking this type of advice are instructed to consult their own legal council for guidance.