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What Are My COBRA Compliance Requirements?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides continuation coverage requirements applicable to group health plans and the individuals that lose coverage under such plans.

Under COBRA rules, both group health plans and the individuals losing coverage under those plans have specific guidelines and strict timetables to follow in both offering and electing to receive COBRA coverage.

Generally speaking, COBRA is applicable to the group health plan(s) of any employer that employs 20 or more individuals on more than 50% of its typical business days in the preceding year is subject to COBRA.

Specifically speaking, however, the rules and guidelines for determining how the individuals are counted are complex. These rules include guidance for counting partners, part-time workers, and contractors, determining "typical business days", and examining COBRA eligibility if your organization is a subsidiary of a larger company.

Individuals Eligible For COBRA

For COBRA purposes, any individual who is covered by a plan that is subject to COBRA is eligible to receive COBRA coverage if the individual loses coverage as a result of a specific COBRA event.

There is no limit as to how long the individual would have needed to be covered under the plan to be eligible for COBRA; as little as one day is sufficient.

Individuals who lose coverage because of a specific COBRA event are called Qualified Beneficiaries or QBs. A QB could have been:

• An employee
  
• A former employee
  
• A retired employee
  
• The dependent children of any of the above (including adopted and placed for adoption children)
  
• The spouse of any of the above*
  
• Children covered by the plan pursuant to Qualified Medical Child Support Orders
  
• Individuals who are covered by the plan who are self employed persons, agents, or independent contractors (and their employees, agents, and independent contractors)
  
• Corporate directors

Note: The right to elect this continued coverage may not be conditioned on the QB's insurability.

Each QB that loses coverage as a result of a specific COBRA event (called a Qualifying Event, or QE) has the right to continue his or her coverage for a specified period of time.

A QE occurs when a COBRA covered event takes place and the event causes a loss of coverage under a group health plan subject to COBRA.

The following events, if they cause a loss of coverage under a group health plan subject to COBRA, are QEs giving rise to QE notice obligations:

• The death of the covered employee
  
• The termination of employment of the covered employee, unless for "gross misconduct"
  
• A reduction in hours worked by the covered employee
  
• The divorce or "legal separation" of the covered employee from the employee's spouse
  
• The employee becoming "entitled to" Medicare coverage
  
• The employee's dependent child (but not other categories of dependents) ceasing to be a dependent entitled to plan coverage
  
• A bankruptcy proceeding of the employer affecting a retiree, his or her spouse, surviving spouse and/or dependents, including a substantial elimination of coverage within one year before or after the bankruptcy filing

The plan is required to notify a QB of these rights, in writing, within strictly defined timeframes as provided under COBRA rules.

Notice Requirements For Employers

COBRA rules require employers to provide notice to the plan administrator of the occurrence of certain qualifying events if the employer is not the entity responsible for administering COBRA.

The following, if they give rise to a loss of coverage, are qualifying events that must be reported by the employer:

• The death of the covered employee
  
• The employee's termination (for other than by reason of gross misconduct)
  
• A reduction in hours of the covered employee
  
• The Medicare entitlement of the employee
  
• A Chapter 11 bankruptcy

Notice from the employer to the plan administrator must be made no later than 30 days after the date on which a qualified beneficiary loses coverage under the plan due to the qualifying event.

The notice must contain the following four items:

• Sufficient information for the plan administrator to determine which plan applies
  
• Identification of the covered employee
  
• The qualifying event
  
• The date of the qualifying event

Although the regulations refer only to the covered employee, employers should provide information pertaining to any QB including covered spouses and dependent children, if any.

Find Training For Your COBRA Compliance Requirements

To find training for your COBRA compliance requirements, either select a recommended course below or click on " COBRA" from the 'Professional Development' section of the search box below.

Related Links

• COBRA Laws
• COBRA Training & Certification Program