COBRA FAQs
COBRA - Consolidated Omnibus Budget Reconciliation Act of 1985. This federal law amended the Internal Revenue Code, ERISA, and the Public Health Services Act to require most employers maintaining group health plans to offer employees, their spouses, and their dependents the opportunity to elect continuation coverage, on a self-pay basis, for 18, 29, or 36 months, depending on the qualifying event. COBRA mandates that qualified beneficiaries be provided with the opportunity to elect to continue their group health plan coverage on a self-pay basis for a prescribed period of time.
2. How do I know if I am eligible to continue my coverage through COBRA?
The three elements necessary to trigger COBRA eligibility are as follows:
The individual must be a qualified individual or beneficiary,
which is based on his/her status on the day before the qualifying event. The three classes of individuals who may be qualified beneficiaries are as follows:a. Covered employees under a group health plan b. Covered spouses/partner of covered employees c. Covered dependent children of covered employees The individual must experience a COBRA qualifying event 3. The individual must lose group health plan coverage as a
result of that event within a certain period of time
3. What are the COBRA qualifying events?
The qualifying COBRA events for employees and dependents are as follows:
Employees:
Termination of employment (for reasons other than the
employee’s gross misconduct)Reduction in the employee’s hours of employment Employee’s spouse or dependent child(ren):
Termination of employment (for reasons other than the
employee’s gross misconduct)Reduction in the employee's hours of employment Death of the employee Divorce or legal separation from the covered employee The employee's entitlement to Medicare 6. The child’s ceasing to be a covered dependent child under
the terms of the planA qualified beneficiary who fails to elect COBRA continuation coverage in connection with a qualifying event ceases to be a qualified beneficiary once the COBRA election period expires.
4. What does HR need from me in order for my coverage to continue?
Once your department provides HR with the information qualifying you for COBRA, a COBRA notification letter and election form will be automatically generated and mailed to your home address. Each eligible employee and dependent will receive a letter and election form containing his/her specific election options. You have 60 days from the date contained on the COBRA notification letter to elect to continue your coverage. After you have made your COBRA election, you then have 45 days to make your initial payment. However, should you choose to maximize these election and payment time periods, your initial payment must be for premiums back to when coverage was lost in order for your coverage to be reinstated. You can find the COBRA application form in the listing on the Forms and Documents page of this Web site.
5. How long will my COBRA coverage last?
- For employees, the COBRA period is 18 months.
- For an employee's family members, the COBRA period is 18 months if the qualifying event is the employee’s termination or reduction in hours of employment and 36 months for all other qualifying events.
Various rules also apply that may result in extending the 18-month coverage continuation period. First, a determination by the Social Security Administration that a qualified beneficiary is disabled may result in 29 months of coverage. Second, an 18-month COBRA period may be extended to 36 months for an employee’s family members if a second qualifying event occurs.
The applicable COBRA period begins to run from the date of the qualifying event unless the Plan provides that the period begins to run on the date coverage is lost as a result of the qualifying event. For Vanderbilt employees, both of these situations apply. For example, a non-exempt employee's COBRA period begins to run from the date of the qualifying event whereas an exempt employee’s COBRA period begins when coverage is lost (i.e. 1st day of the month following the qualifying event).
Certain events may occur that have the effect of cutting short the applicable COBRA period. These events include:
The employer's ceasing to provide group health plan
coverage to any of its employeesThe qualified beneficiary's failing to pay premiums in a
timely mannerThe qualified beneficiary's first becoming, after the COBRA
election, covered under another group health plan that:a. Does not contain an exclusion or limitation applicable to the qualified beneficiary's preexisting condition b. Contains such an exclusion or limitation, but such exclusion or limitation does not apply to the individual, because he or she has at least 12 months of creditable coverage pursuant to HIPPA (and has not incurred a 63 day break in coverage) 4. The qualified beneficiary’s first becoming, after the COBRA
election, entitled to Medicare5. The loss of Social Security disability status Once COBRA coverage is elected, qualified beneficiaries must be covered under the plan retroactive to the date coverage was lost. Additionally, COBRA coverage can be retroactively cancelled to the first day of any period for which premiums have not been timely paid.
Employers (or Plans) are not required to provide any additional notice to qualified beneficiaries prior to terminating coverage for failure to timely pay premiums.
6. What happens if I fail to elect COBRA within 60 days?
A qualified beneficiary who fails to elect continuation coverage within the 60-day election period ceases to be a qualified beneficiary and is no longer eligible to elect COBRA coverage with respect to that particular qualifying event once the election period expires. Once qualified beneficiary status is lost, the statute does not require that it be reinstated.
7. How much will I be required to pay for continuing my coverage through COBRA?
COBRA permits plan sponsors to charge qualified beneficiaries 100 percent of the cost of the coverage, plus an additional 2 percent. Moreover, in the case of a qualified beneficiary entitled to 29 months of COBRA coverage resulting from disability, the plan sponsor generally can charge 150 percent of the cost of coverage for the additional 11 months. See the table on the COBRA page for current rates. For assistance in determining a specific disability rate of 150%, please contact the COBRA office.
8. What initial amount am I required to pay to enroll in COBRA?
The initial payment must include premiums from the first day of COBRA coverage through the current month in which the initial payment is being made.
For example:
- Your active coverage ended on 1/31/05, which qualifies you to continue your coverage through COBRA effective 2/1/06. A COBRA Notification letter was mailed to you on 2/1/05, in which you now have 60 days to elect COBRA coverage.
- Your election form is received on 3/1/05. You now have 45 days to make your initial payment.
- On 4/15/05, the payment required in order for your coverage to be retroactively reinstated back to 2/1/05 would need to be the total of your February 2001–April 2001 premiums (3 months).
9. What address do I send my election form or any other correspondence related to billing questions or address changes to?
All election forms and other correspondence should be mailed to:
Vanderbilt University
Attn: COBRA/Direct Billing
VU Station B 357700
Nashville, TN 37235-7700
10. What address do I mail my payment to?
All payments should be mailed to:
Vanderbilt University
Attn: COBRA/Direct Billing
VU Station B 357700
Nashville, TN 37235-7700Payments must be made in the form of a check or money order payable to Vanderbilt University.
11. After the initial payment is made, when are my monthly payments due going forward?
Payments are due by the 1st of each month (for the month in which coverage is intended) in order for benefits to continue.
12. How do I terminate my COBRA coverage?
In order to voluntarily terminate your COBRA coverage, a written request must be received, which must be signed by the individual who elected the coverage. This letter should also contain your COBRA ID and the applicable effective date in which your coverage is to end.
13. What happens if I fail to receive a monthly billing statement?
You may contact the Billing office at 615-322-3278 to request your account balance or another billing statement. In order to ensure the mailing of your statement to the proper location, please notify us immediately of any mailing address changes.
Please note that failure to receive a monthly billing statement does not relieve you of your responsibility of making timely premium payments.
14. Will Vanderbilt notify me if my COBRA coverage is about to be terminated due to lack of payment?
No. It is the COBRA participant's responsibility to ensure that COBRA payments are made by the 1st of each month. Vanderbilt is not required to check with a participant to see why his/her account is delinquent or to inquire as to whether the coverage is needed any longer prior to termination.
COBRA - Consolidated Omnibus Budget Reconciliation Act of 1985. This federal law amended the Internal Revenue Code, ERISA, and the Public Health Services Act to require most employers maintaining group health plans to offer employees, their spouses, and their dependents the opportunity to elect continuation coverage, on a self-pay basis, for 18, 29, or 36 months, depending on the qualifying event. COBRA mandates that qualified beneficiaries be provided with the opportunity to elect to continue their group health plan coverage on a self-pay basis for a prescribed period of time.
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HR Express 2525 West End Ave Suite 218 Nashville TN 37203 Hours M-F 7:30 - 5:30 Last Updated: October 19, 2009 |
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