Indiana Cobra Insurance

 

 INFORMATION REGARDING COBRA ELIGIBILITY DUE TO A QUALIFYING EVENT

Consolidated Omnibus Reconciliation Act of 1985 (COBRA)

 

 

Under federal COBRA law, the State of Indiana is required to offer covered employees and eligible dependents the opportunity to continuation of health coverage at group rates when coverage is lost due to certain specific events. The information provided below is a shortened version of the actual notice provided at the time that a qualified event is experienced and should be used only as a reference tool.

The loss of health insurance resulting from a qualified event allows all covered individuals the right to buy back group health insurance and continue the coverage for a period of time under provisions of COBRA. Covered participant’s COBRA rights and obligations are detailed in this notification.

Each individual who was covered under the plan on the day before the event is a “qualified beneficiary” and has independent election rights to continuation coverage. This means each dependent that was covered can elect independently to continue coverage, even if the covered employee chooses not to continue coverage. However, continuation coverage is available to qualified beneficiaries subject to their continued eligibility.

After the employer is notified that a qualifying event has occurred, the covered individuals (also known as qualified beneficiaries) will be notified of their rights to elect continuation coverage. Each qualified beneficiary has independent COBRA election rights and will have 60 days to elect continuation coverage. The 60 day election window is measured from the later of the date health plan coverage is lost due to the event or from the date of COBRA notification. This is the maximum period allowed to elect COBRA, as the plan does not provide an extension of the election period beyond what is required by law. If a qualified beneficiary does not elect continuation coverage within this election period, then rights to continue health insurance will end and they cease to be a qualified beneficiary

You may not be covered under the plan during the election period. However, if a COBRA election is made and applicable premiums paid, then your health insurance plan will be reactivated back to your loss of coverage date and pending claims will be released for payment.

If you elect to continue your health insurance, a qualified beneficiary is responsible for the full applicable premium payment for the coverage selected, plus a 2% administration charge. The applicable premium includes both the employer and employee’s share of the total premium.

Under the provisions of COBRA, each qualified beneficiary can elect to continue all the coverages or any single coverage or any combination of the coverages. The applicable premiums will vary depending on the coverage elected. If you are covered by a region specific HMO and are moving outside of the HMO service area, additional rights may be available to you at the time of the event.

If the event causing the loss of coverage is a termination of employment or a reduction in work hours, then each qualified beneficiary may continue coverage for up to 18 months from the date of the qualifying event.

If the original event causing the loss of coverage was the death of the employee, divorce, legal separation, Medicare entitlement, or a dependent child ceasing to be a dependent, then each qualified beneficiary will have the opportunity to continue coverage for up to 36 months from the date of the qualifying event.

You will receive a Certificate of Health Insurance Portability which details the amount of time covered under the group health insurance plan.

Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the time covered under the group health plan (including COBRA coverage, if elected) may be used to reduce a new health plan’s pre-existing condition period. For example, if you were covered under our health plan for 10 months, including COBRA coverage, and your new health plan has a 12 month pre-existing condition clause for new enrollees, the new plan would subtract 10 months from the 12 month pre-existing condition period, which would leave you with only a two month pre-existing condition period. However, for your coverage under our plan to be counted under a new health plan, there must not be a break in coverage for more than 63 days from the time our plan (including COBRA coverage, if elected) ceases, to the date of enrollment in your new health plan.

Questions regarding a new health plan’s pre-existing condition period and the impact HIPAA will have, should be directed to your new health plan. If you obtain other health insurance, present the Certificate of Health Insurance Portability to your new health insurance plan and they will determine if any benefits are available to you in this matter.

COBRA – Provides some former employees, retirees, spouses, and dependents the right to buy temporary continuation of group health plan coverage at group rates. COBRA may be an option for health insurance if you have been laid off.

 

HIPAA – Provides protection for you and your family when you need to buy, change, or continue your health insurance. Among others, these protections include limits on the use of pre-existing condition exclusions and usually guarantees that you can renew your coverage regardless of any health conditions in your family.

What does COBRA do?

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events.  Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage.

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:

1. 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.

2. 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.

3. 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:

  • Loss of dependent child status under the plan rules
  • 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
  • How does a person become eligible for COBRA continuation coverage?
  • To be eligible for COBRA coverage, you must have been enrolled in your employer’s health plan when you worked and the health plan must continue to be in effect for active employees. COBRA continuation coverage is available upon the occurrence of a qualifying event that would, except for the COBRA continuation coverage, cause an individual to lose his or her health care coverage.

 

 

What process must individuals follow to elect COBRA continuation coverage?

Employers must notify plan administrators of a qualifying event within 30 days after an employee’s death, termination, reduced hours of employment or entitlement to Medicare.

A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation or a child’s ceasing to be covered as a dependent under plan rules.

Plan participants and beneficiaries generally must be sent an election notice not later than 14 days after the plan administrator receives notice that a qualifying event has occurred.  The individual then has 60 days to decide whether to elect COBRA continuation coverage. The person has 45 days after electing coverage to pay the initial premium.

 

Can I receive COBRA benefits while on FMLA leave?

The Family and Medical Leave Act, effective August 5, 1993, requires an employer to maintain coverage under any group health plan for an employee on FMLA leave under the same conditions coverage would have been provided if the employee had continued working. Coverage provided under the FMLA is not COBRA coverage, and FMLA leave is not a qualifying event under COBRA. A COBRA qualifying event may occur, however, when an employer’s obligation to maintain health benefits under FMLA ceases, such as when an employee notifies an employer of his or her intent not to return to work.

I have heard about the new COBRA extension and subsidy that was contained in the Stimulus package signed by the President. I would like more information.

The American Recovery and Reinvestment Act of 2009 expanded eligibility for COBRA and provides a premium reduction to certain qualified individuals. Individuals eligible for COBRA coverage who were involuntarily terminated by their employer on or after September 1, 2008 through December 31, 2009 who are eligible for COBRA and elect COBRA may be eligible to pay a reduced premium amount that is only 35% of the premium costs for your COBRA coverage. If you were terminated during that period and were covered by your employer’s plan on your last day of employment, your plan administrator should provide you a notice of your eligibility to elect COBRA and to receive a premium reduction. You may also want to contact your employer directly to ask about getting the premium reduction.

If you have specific questions about your situation and how these new rules apply to you, you may wish to speak with a Department of Labor Benefits Advisor by calling 1.866.444.3272. You should also check the Employee Benefits Security Administration’s dedicated Web page at www.dol.gov/COBRA. This Web page will contain helpful information and will be updated regularly to include FAQs and new information related to the process you should follow to apply for COBRA and/or the premium reduction.

 

How can I apply for the COBRA premium subsidy?

Individuals eligible for COBRA coverage who were involuntarily terminated by their employer on or after September 1, 2008 through December 31, 2009 who are eligible for COBRA and elect COBRA may be eligible to pay a reduced premium amount that is only 35% of the premium costs for your COBRA coverage. If you were terminated during that period and were covered by your employer’s plan on your last day of employment, your plan administrator should provide you a notice of your eligibility to elect COBRA and to receive a premium reduction. You may also want to contact your employer directly to ask about getting the premium reduction.

You should also check the Employee Benefits Security Administration’s dedicated Web page at www.dol.gov/COBRA. This Web page will contain helpful information and will be updated regularly to include FAQs and new information related to the process you should follow to apply for COBRA and/or the premium reduction.

Coverage with COBRA

The COBRA plan offers health coverage to a terminated employee for a maximum of 18 months, sometimes less depending on how you qualify for the plan, and the family of an employee for up to 36 months, offering the same benefits as the initial group health care policy.  It is important to note that COBRA only covers medical insurance, and does not include life insurance or disability coverage. The following are some of the benefits offered by a COBRA health plan:

  • Inpatient and outpatient      hospital care
  • Physician care
  • Surgery
  • Prescription drugs
  • Other medical benefits, such      as dental and vision care

Though COBRA coverage offers many of the same functions as individual and family health plans, they are often more costly so make sure to compare your options before committing to a COBRA plan.

What if I move within Indiana or to another state?

If you move, you will need to update your address and phone number with the carriers so that they have updated information for billing and communications. You will need to contact the carriers directly as they maintain enrollment once you leave state employment.

Will there be a lapse in my coverage?

No. Your COBRA coverage will begin the day your coverage as an employee ends.

What about my HSA?

While the state does not contribute to HSAs for COBRA participants, the money in your HSA is yours to keep for eligible expenses. You may continue to contribute to an HSA post-tax if you participate in a CDHP.

 

What about COBRA or a cancer only policy is that considered health insurance?

COBRA is considered health insurance, but if you exhaust your COBRA benefits you do not have to wait another six months to be eligible for HIP. Disease specific policies such as cancer policies are not considered health insurance. Accident policies and other policies designed to give the person income for periods of hospitalization, certain loss of limbs, or expenses incurred from accidents are also not considered health insurance.

 

COBRA

(Consolidated Omnibus Budget Reconciliation Act-1985)

COBRA is a temporary extension of your employer’s group health coverage insurance. You must apply within 60 days of a specific qualifying event or you will lose your right to extend your group coverage under COBRA. The employer must notify the plan’s administrator within 30 days of the qualifying event. The plan administrator must send you a COBRA election notice within 14 days of receiving notification. To sign up, you should talk to the employer’s benefits or human services division. COBRA can help you if you are under 65 and disabled and qualify. You may find it difficult to buy other health care insurance.

The employee and their dependent beneficiaries must be offered the same health insurance benefits with the same deductibles and benefit limits that they were receiving before the COBRA qualifying event.

You are eligible if:

 The employer has 20 or more employees.

 The employee has worked at least half of working days in the previous year.

 The employee is covered by the group health plan and you are in the employer group health plan on the day before the employee has a “qualifying event”. (A specific event that causes you to lose employer group health care coverage).

 

05/2010

Qualifying   Event Who’s   Eligible Length   of Eligibility
Voluntary or involuntary   termination of employment/reduction of work hours (other than for “gross   misconduct) EmployeeSpouseDependent Child 18 Months
Employee enrolls in   Medicare Part A or B SpouseDependent Child 36 Months
Employee & covered   individual divorce SpouseDependent Child 36 Months
Employee dies SpouseDependent Child 36 Months
Loss of dependent child   status Dependent Child 36 Months

 

Under COBRA you will be paying the entire premium for coverage plus a 2% administrative charge. While this can be expensive, compare the total cost and benefits of COBRA coverage with the total cost and benefits of other options (including Original Medicare, Medicare Advan-tage Plans, Medigap policies, ICHIA, and private health care insurance) to determine what will best suit your finances and health needs. Be sure to compare:

 Prescription coverage

 Eye, dental, foot, and other coverage

 Maximum benefit limits (annual & specific types of care)

 Co-pay amounts

 Yearly deductibles

 

Cobra and Social Security Disability Benefits

The employer group health insurance extends for 18, 29, or 36 months, (depending on qualifying event). If you qualify for Social Security disability benefits, special rules apply to extend the 18 months of COBRA coverage to 29 months. To receive this special coverage extension, you must notify the former employer insurance division within 60 days of receiving your disability determination.

You pay the entire premium, plus a 2% administrative charge to the continued group health plan for the first 18 months. If your disability

started before your COBRA qualifying event, your group coverage could be extended to 29 months. For the last 11 months, your premium will increase to 150% of the original premium. If you enroll in Medicare Part A or Part B after already being on COBRA, your COBRA coverage will end.

Special Note: If you have Medicare prior to the qualifying event, you must be offered COBRA coverage.

For more information about COBRA, call the SHIP State Office and ask for a COBRA brochure, or call the Department of Labor for COBRA questions, 1-202-219-8784 or 1-202-219-8776. To learn more about how to apply for Social Security or Medicare benefits, call 1-800-772-1213 (for hearing impaired, TTY: 1-800-325-0778) or visit their website at www.ssa.gov.

05/2010