COBRA Health Insurance Coverage Continuation Law
Update Jan. 13, 2010:
DOL Releases Updated COBRA Model Notices
On Feb. 17, 2009, President Barack Obama signed into law the American Recovery and Reinvestment Act of 2009, (ARRA) commonly called the economic stimulus package, which includes a provision that would subsidize employees' COBRA payments to continue their health insurance coverage. The subsidy was extended and expanded by Congress and signed into law on Dec. 21, 2009.
Audio Conference: New COBRA Subsidy Extension: Step-by-Step Guidance for Employers
Under the stimulus package law passed in February, the government would pay 65% of workers' COBRA premiums for up to 9 months. Eligible employees include anyone who has lost or loses a job between September 1, 2008 and Dec. 31, 2009. To qualify for the subsidy, people must certify that their income is no more than $125,000 for individuals and $250,000 for families. Employees who have already been laid off but chose not to sign up for COBRA coverage have 60 days to do so.
HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including health benefits
The Internal Revenue Service (IRS) has set up its own Web page, with information for employers on administering the COBRA subsidy and obtaining credits against payroll taxes. Employers should use the updated Form 941, Employer¹s Quarterly Federal Tax Return, to report their COBRA premium assistance payments. The form and instructions are available on the Web page, along with a link to a Q & A page.
Related articles on COBRA
COBRA tools for Employment Law Letter subscribers
COBRA rules and regulations for employers
Of all the federal laws governing the workplace, COBRA (Consolidated Omnibus Budget Reconciliation Act) is at the top of the list in terms of complexity and confusion. It sounds like such a simple law, and its intent was certainly noble. COBRA is basically a safety net for employees and their families to keep their health insurance, at their own expense, when they’re in between jobs or other life major events happen – like getting separated or divorced.
Generally, COBRA health insurance coverage can last up to 36 months depending on the circumstances. Employers with at least 20 employees are covered by COBRA law. Some states have similar laws that apply to smaller employers or require longer periods of continuation coverage.
State-by-state comparison of 50 laws in all 50 states, including health insurance continuation laws
But what started out as a seemingly simple premise has evolved into a monolithic jumble of laws, regulations, and regulatory documents. Not to mention the morass of case law interpreting what the law and regulations say and require. One word of caution: It’s impossible to answer every question that may arise about COBRA compliance in a few paragraphs or even pages. For many questions about COBRA, consulting a competent benefits attorney is the only way to be completely sure of compliance.
COBRA notification
COBRA requires employers to comply with several notice requirements to inform employees and their dependents of their rights to continued health coverage under COBRA. Separate notices must be given to employees (and their spouses) when they first start participating in your plan and to employees and dependents after they experience an event that would cause them to lose coverage under your plan.
Audit your COBRA policies and practices with the Employment Practices Self-Audit Workbook
COBRA enforcement
The U.S. Department of Labor (DOL) is responsible for interpreting and administering the COBRA provisions that appear in the Employee Retirement Income Security Acr (ERISA), while the Internal Revenue Service (IRS) is responsible for interpreting and enforcing the provisions that appear in the Internal Revenue Code. The two agencies share responsibility for enforcing COBRA.
COBRA qualifying events
Qualifying events that can trigger COBRA rights include the following:
- termination of employment (including firing for a reason other than gross misconduct, retiring, or quitting);
- reduction in hours so that the employee is no longer qualified for the health plan;
- major life events (An employee’s spouse and dependent children may be entitled to COBRA coverage when the employee dies, the employee becomes entitled to Medicare, or the employee and spouse get divorced or legally separated.); and
- layoff.
Keep up with the latest changes in laws regarding employee benefits with the Benefits and Compensation Law Alert and the Benefits and Compensation Law for Non-Profits.
Military leave and health insurance coverage continuation
Going on military leave can be a qualifying event because of a reduction in hours. Employees on military leave also are protected by the Uniformed Services Employment and Reeemployment Rights Act (USERRA), which allows them to continue health care coverage, at their expense, for themselves and covered dependents for up to 24 months.
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Related articles on COBRA Health Insurance Coverage Continuation Law featured in HR Hero Line, HR Hero White Papers, and Employment Law Post
- DOL Releases Updated COBRA Model Notices
(Human Resources News, January 2010)
- COBRA Subsidy Extension Legislation’s Effect on Employers
(Human Resources News, December 2009)
- President Signs COBRA Subsidy Extension Legislation into Law
(Human Resources News, December 2009)
- Senate Votes to Extend COBRA Subsidy
(Human Resources News, December 2009)
- House Passes COBRA Subsidy Extension and Expansion
(Human Resources News, December 2009)
- COBRA Bills Face Uncertain Future as Federal Subsidy Begins to Expire
(Human Resources News, November 2009)
- House Passes Momentous Health Care Reform Legislation
(Human Resources News, November 2009)
- Senators Introduce Another COBRA Subsidy Extension Bill
(Human Resources News, November 2009)
- House Health Reform Bill’s Impact on Employers
(Human Resources News, November 2009)
- Congressman Introduces COBRA Subsidy Extension Legislation
(Human Resources News, October 2009)
- Our Best Benefits Bet: Congress Will Extend COBRA Subsidy
(Human Resources News, October 2009)
- Managing Employee Health Insurance Premiums under Revised FMLA Regulations
(Georgia Employment Law Letter, October 2009)
- IRS Issues New COBRA Guidance for Employers
(Human Resources News, April 2009)
- DOL Issues COBRA Model Notices
(Human Resources News, March 2009)
- What the Obama Stimulus Plan Means for Employers: COBRA, Benefits, and More
(HR Hero White Papers , March 2009)
- More Details on COBRA Continuation Subsidy in Stimulus Package
(Human Resources News, February 2009)
- Stimulus Bill Brings COBRA, Other Issues for Employers
(Human Resources News, February 2009)
- What Obama's Economic Stimulus Plan Means for Employee Benefits Plans
(Benefits and Compensation Law Alert , February 2009)
HR Tools for COBRA)
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