First and foremost, it should be noted that this law applies only to employers who have 20 or more employees on more than 50 percent of its typical business days in the previous calendar year. Both full-time and part-time employees are counted to determine this number; however, each part-time employee is counted as a fraction of a full-time employee (fraction means the number of hours worked by part-time employee divided by the number of hours employee must work to be considered full-time).

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. However, it is only available when coverage is lost due to specific qualifying events.

Employees and their covered spouses must be notified that they are entitled to COBRA benefits in an initial notice. This notice must be provided within 90 days of the date they are hired. One notice may be sent to both the employee and the spouse if they live at the same address and the spouse’s coverage begins on or after the date of coverage for the covered employee.

A qualifying event is one that would cause an individual to lose health coverage. The type of qualifying event determines who is eligible and the amount of time you must offer health coverage to them under COBRA. Note that you may, at your discretion, provide longer periods of continuation coverage.

Qualifying events for employees include voluntary or involuntary termination of employment for reasons other than gross misconduct, or a reduction in the number of hours of employment.

Qualifying events for spouses include voluntary or involuntary termination of the covered employee’s employment for any reason other than gross misconduct, a reduction in the hours worked by the covered employee, the covered employee becoming entitled to Medicare, divorce or legal separation of the covered employee, or death of the covered employee.

Qualifying events for dependent children include all of those listed above for spouses, as well as loss of dependent child status under the plan rules.

The election notice must be provided to the beneficiary in person or by first class mail within 14 days after notice is received that a qualifying event has occurred. This notice must be in writing and written in such a manner that the average plan participant can understand it. The practice must give qualified beneficiaries at least 60 days for them to elect COBRA coverage. This 60-day period begins the date the election notice is provided to the beneficiary.

If you receive notice of a qualifying event from a beneficiary and determine that the individual is not eligible for continuation coverage, you must provide a notice of unavailability (denial). You must also provide the beneficiary with an explanation of why the coverage was denied. Also, notice of early termination of continuation coverage must be provided in the event the plan cancels a beneficiary’s coverage prior to the maximum coverage period. This cancellation can be triggered for such things as nonpayment or when you cease to offer health insurance coverage. The notice must include the reason the coverage has terminated early, the date of coverage termination, and any conversion rights the beneficiary might have.

The COBRA coverage begins on the date that health care coverage is lost due to a qualifying event.

COBRA beneficiaries are generally eligible for group coverage for a maximum of 18 months for qualifying events due to employment termination or reduction in hours or work. There is an 11-month disability extension of the 18-month period (for a total of 29 months of COBRA coverage) if an employee or anyone in the employee’s family is determined by the Social Security Administration to be disabled.

If the beneficiary experiences a second qualifying event during the initial period of coverage, they may be permitted to receive a maximum of 36 months of coverage. This extension may be available to the spouse and any dependent children receiving continuation coverage if the employee or former employee dies, becomes entitled to Medicare, or gets divorced or legally separated, or if the dependent child becomes ineligible under the plan as a dependent child, but only if the event would have caused the spouse or dependent child to lose coverage under the Plan had the first qualifying event not occurred.

The practice may require beneficiaries to pay for their COBRA coverage; however, the premium cannot exceed 102 percent of the cost of the plan. For qualified beneficiaries receiving the 11-month disability extension of coverage, the premium may be increased for those additional months to 150 percent of the cost of the plan.

The initial premium payment must be made within 45 days after the date of the COBRA election. That initial payment must cover the period of coverage from the date of the COBRA election retroactive to the date of the loss of coverage due to the qualifying event. Premium payments for the remaining periods of coverage are due on the date stated in the plan with a minimum 30-day grace period for payments. If premiums are not paid by the first day of the period of coverage, the practice has the option to cancel coverage until payment is received and then reinstate coverage retroactively to the beginning of the period of coverage.

The practice is not obligated to send monthly premium notices. The responsibility for payment rests solely with the beneficiary.

It should also be noted that coverage provided under the FMLA is not COBRA coverage, and FMLA leave is not a qualifying event under COBRA.

This summary provides some of the basics regarding this complex regulation. For more detailed information concerning COBRA, you may want to visit the U.S. Department of Labor’s website at www.dli.state.pa.us.