Understanding COBRA (Consolidated Omnibus Budget Reconciliation Act)
What does COBRA mean to employers?
COBRA generally applies to group health plans (medical, prescription, dental, and vision care) maintained by employers that have at least 20 employees. COBRA requires group health plans to offer continuation coverage to covered employees, former employees, spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to specific events (including termination or reduction in hours, a covered employee’s becoming eligible for Medicare, divorce or legal separation, and a child’s loss of dependent status). COBRA sets rules for how and when continuation coverage must be offered and provided, how qualified beneficiaries may elect continuation coverage, and what circumstances justify terminating continuation coverage. Often employers choose to utilize a third party administrator, or COBRA expert, to handle COBRA due to complex requirements and legal issues.
Group health plans maintained by employers that have less than 20 employees are subject to Pennsylvania State Continuation, or Mini COBRA. Pennsylvania’s Mini COBRA is modeled after the federal COBRA law, but applies to employees of smaller businesses, and it is for a shorter length of time. Mini COBRA allows continuation of medical and prescription plans only, not separate dental or vision plans. In most cases Mini COBRA is self-administered by the employer, under direction of the state insurance department.
What does COBRA mean to employees?
You have certain rights under COBRA and Mini COBRA when you lose group health coverage due to specific events. Depending on the level of coverage and cost of your employer’s group health plan, it may make sense for you to elect COBRA continuation coverage. If you do experience such a loss of coverage, it is a qualifying event that provides you with a special enrollment period in which you can purchase your own individual health plan. You may even find that you qualify for premium assistance, or a subsidy, to further reduce the cost of your individual health plan.
A Miller’s Employee Benefits representative advises employers of their requirements under COBRA or Mini COBRA, and facilitates the relationship with a COBRA administrator if necessary. We also provide assistance to individuals facing a loss of group health coverage, by providing rates and information on individual plans as an alternative to COBRA. Contact us today to learn more!
Shannon Bristow ext. 3380 or Ronald Hutson ext. 3340.