Frequently Asked Questions (FAQs)

Here are some of the frequently asked questions (FAQs) regarding COBRA On-demand services.

What is COBRA?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. This is the federal law that requires employers with 20 or more employees to offer continuation coverage of their group health plans to covered employees, former employees, spouses, and dependents when group health coverage is lost due to specific events, like an employee’s termination or reduction in hours.

What are the notice requirements?

There are strict regulations concerning COBRA notices and the time frames and manner in which they have to be provided to eligible employees and qualifying beneficiaries.

  • The General/Initial Notice needs to be provided within the first 90 days of coverage under the group health plan.
  • The Election Notice needs to be provided within 14 days of being notified of a qualifying event.
  • The Unavailability of Continuation of Coverage Notice needs to be provided within 14 days after receipt of a request for continuation.
  • The Termination of Coverage Notice needs to be provided as soon as practicable after a decision has been made to terminate the coverage due to certain specified events.

Who pays for COBRA coverage?

Usually the beneficiary pays for COBRA coverage. The cost cannot be more than 102% of the premium cost for similarly situated employees that haven’t lost their coverage. Usually the beneficiary will pay for both the employee and any employer portion of the premium after they have lost their coverage.

What is the penalty if there are possible errors?

There is a possible penalty of $110 per day per affected person.

Who qualifies for continuation of coverage?

According to the DOL, there are 3 elements to qualifying for COBRA benefits. COBRA establishes specific criteria for plans, qualified beneficiaries, and qualifying events:

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 on 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.

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.

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.

The qualifying events for employees are:

  • Voluntary or involuntary termination of employment for reasons other than gross misconduct
  • Reduction in the number of hours of employment

The qualifying events for spouses are:

  • 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

The qualifying events for dependent children are the same as for the spouse with one addition:

  • Loss of dependent child status under the plan rules

What does CDSA do?

CDSA can help employers stay compliant with COBRA regulations. We will make sure qualified beneficiaries will get the required notices within the correct timeframes, we will keep all related parties informed of continuation/termination of coverage elections, collect and remit premiums, keep a record of all notices, election & coverage periods and premium collections.

Let us exceed your expectations. Contact us at (888) 388-1040 to learn more.