1 health benefits under cobra consolidated omnibus budget reconciliation act of 1985 u.s. department...
TRANSCRIPT
1
Health Benefits Under Health Benefits Under COBRACOBRA
Consolidated Omnibus Consolidated Omnibus Budget Reconciliation Act Budget Reconciliation Act
of 1985of 1985
U.S. Department of LaborU.S. Department of LaborEmployee Benefits Security AdministrationEmployee Benefits Security Administration
2
The LawThe Law
COBRA amended:COBRA amended:
ERISAERISA(Sections 601 – 608)(Sections 601 – 608)
Internal Revenue Code Internal Revenue Code (IRC § 4980B)(IRC § 4980B)
Public Health Service Act Public Health Service Act
3
What is COBRA What is COBRA Continuation Coverage?Continuation Coverage?
It is continuation coverage that group It is continuation coverage that group health plans are required to offer to health plans are required to offer to qualified beneficiaries (i.e., employees, qualified beneficiaries (i.e., employees, spouses, dependents) when group spouses, dependents) when group health plan coverage would otherwise health plan coverage would otherwise be lost due to a qualifying event (such be lost due to a qualifying event (such as termination or reduction of hours of as termination or reduction of hours of employment, divorce, death of covered employment, divorce, death of covered employee, etc.). employee, etc.).
4
Who is Entitled to Who is Entitled to COBRA?COBRA?
An individual will be entitled to COBRA An individual will be entitled to COBRA if 3 basic requirements are metif 3 basic requirements are met
1.1. Your group health plan is covered by Your group health plan is covered by COBRA (plan coverage)COBRA (plan coverage)
2.2. A qualifying event occurs (QE)A qualifying event occurs (QE)
3.3. They are a qualified beneficiary (QB)They are a qualified beneficiary (QB)
5
Plans Covered by COBRAPlans Covered by COBRA
1.1. Is your health plan covered by Is your health plan covered by COBRA?COBRA?
Yes, if it is:Yes, if it is:
A group health plan;A group health plan;
Sponsored by a private sector employer; Sponsored by a private sector employer;
That employed at least 20 employees in That employed at least 20 employees in previous calendar yearprevious calendar year
6
Plan CoveragePlan CoverageGroup Health PlanGroup Health Plan
An arrangement established or An arrangement established or maintained by an ER to provide EEs maintained by an ER to provide EEs or their families with medical care.or their families with medical care. ArrangementArrangement
Insurance Insurance HMOHMO From ER’s assetsFrom ER’s assets
Medical CareMedical Care Physician carePhysician care Hospital Care (inpatient and outpatient)Hospital Care (inpatient and outpatient) Surgery and other major medical benefitsSurgery and other major medical benefits Prescription drugsPrescription drugs Dental and vision careDental and vision care
7
Plan CoveragePlan CoverageSponsored by an EmployerSponsored by an Employer
COBRA amended ERISA to cover group COBRA amended ERISA to cover group health plans sponsored by: health plans sponsored by:
Private-sector ERPrivate-sector ER Employee organizations (labor unions)*Employee organizations (labor unions)**Special rules may apply*Special rules may apply
Other laws may have similar provisions for Other laws may have similar provisions for group health plans sponsored by:group health plans sponsored by:
Federal governmentFederal government State or local governments State or local governments
8
Plan CoveragePlan CoverageEmployed at Least 20 EEsEmployed at Least 20 EEs
20 Employees20 Employees Full-timeFull-time Part-timePart-time
More than 50% of its typical More than 50% of its typical business daysbusiness days
In the previous calendar yearIn the previous calendar year
9
Qualifying EventsQualifying Events
What is a qualifying event?What is a qualifying event?
A qualifying event (QE) is an event A qualifying event (QE) is an event specified in COBRA where an individual specified in COBRA where an individual loses group health care coverage.loses group health care coverage.
The QE determines who the qualified The QE determines who the qualified beneficiaries (QBs) are for that event and beneficiaries (QBs) are for that event and the period of time that the plan must offer the period of time that the plan must offer continuation coverage. continuation coverage.
10
Qualifying EventsQualifying Events
QEs for QEs for Covered EmployeesCovered Employees (if the event causes the covered EE to (if the event causes the covered EE to
lose coverage)lose coverage)
Voluntary or involuntary termination of Voluntary or involuntary termination of EE’s employment for any reason other EE’s employment for any reason other than “gross misconduct”than “gross misconduct”
Reduction of EE’s hours of employmentReduction of EE’s hours of employment
11
Qualifying EventsQualifying Events QEs for QEs for SpouseSpouse and and Dependent ChildDependent Child of of
covered EE (if event causes the spouse or covered EE (if event causes the spouse or dependent child to lose coverage)dependent child to lose coverage) Termination of covered EE’s employment for any Termination of covered EE’s employment for any
reason other than “gross misconduct”reason other than “gross misconduct” Reduction in hours worked by covered EEReduction in hours worked by covered EE Covered EE becomes entitled to MedicareCovered EE becomes entitled to Medicare Divorce or legal separation of spouse from covered Divorce or legal separation of spouse from covered
EEEE Death of covered EEDeath of covered EE
In addition to above, a QE for a In addition to above, a QE for a Dependent Dependent ChildChild Loss of “dependent status” under the plan rulesLoss of “dependent status” under the plan rules
12
Qualified BeneficiariesQualified Beneficiaries A QB is an individual who was covered by a A QB is an individual who was covered by a
group health plan on the day before the QE group health plan on the day before the QE occurred that caused loss of coverageoccurred that caused loss of coverage Covered EECovered EE Their spouse (or former spouse)Their spouse (or former spouse) Their dependentsTheir dependents
In certain cases involving Chapt. 11 In certain cases involving Chapt. 11 bankruptcy of the ER, QBs also may includebankruptcy of the ER, QBs also may include Covered retireeCovered retiree Their spouse (or former spouse)Their spouse (or former spouse) Their dependentsTheir dependents
13
Qualified BeneficiariesQualified Beneficiaries
A QB can also beA QB can also be Any child born or placed for adoption Any child born or placed for adoption
with a covered employee during a with a covered employee during a period of continuation coverageperiod of continuation coverage
Agents, independent contractors, and Agents, independent contractors, and directors who participate in the group directors who participate in the group health planhealth plan
14
Notices and Election Notices and Election ProceduresProcedures
Notice Procedures (cont.)Notice Procedures (cont.)
COBRA General Notice COBRA General Notice (Model Notice)(Model Notice)(from plan to QB w/in 90 days of coverage) (from plan to QB w/in 90 days of coverage)
Information included in General NoticeInformation included in General Notice Name of plan, and address and telephone Name of plan, and address and telephone
number of someone who can be contacted number of someone who can be contacted for more plan and COBRA informationfor more plan and COBRA information
Description of COBRA rightsDescription of COBRA rights Explanation of what a QB must do to notify Explanation of what a QB must do to notify
plan of a QE or disabilitiesplan of a QE or disabilities Explanation of the importance of keeping Explanation of the importance of keeping
the plan administrator informed of the plan administrator informed of addresses of the Ps and Bsaddresses of the Ps and Bs
15
Notices and Election Notices and Election ProceduresProcedures
Notice Procedures (cont.)Notice Procedures (cont.)
COBRA Qualifying Event NoticesCOBRA Qualifying Event Notices Employer (30 days)Employer (30 days)
Termination or reduction of hoursTermination or reduction of hours Death of covered EEDeath of covered EE Bankruptcy of ERBankruptcy of ER
Covered EE or other QB (60 days)Covered EE or other QB (60 days) DivorceDivorce Legal separationLegal separation Child’s loss of dependent status under the planChild’s loss of dependent status under the plan
16
Notices and Election Notices and Election ProceduresProcedures
Notice Procedures (cont.)Notice Procedures (cont.)
COBRA Election Notice COBRA Election Notice (Model Notice)(Model Notice)(must be provided to QBs w/in 14 days after (must be provided to QBs w/in 14 days after
plan administrator receives notice of QE)plan administrator receives notice of QE)
Information included in Election NoticeInformation included in Election Notice Name of plan, and address and telephone Name of plan, and address and telephone
number of someone who can be contacted number of someone who can be contacted for more plan and COBRA informationfor more plan and COBRA information
How to elect coverageHow to elect coverage What will happen if coverage is not electedWhat will happen if coverage is not elected What coverage is available, for how long, and What coverage is available, for how long, and
how it can extend for disability or second how it can extend for disability or second QEsQEs
17
Notices and Election Notices and Election ProceduresProcedures
Notice Procedures (cont.)Notice Procedures (cont.)
COBRA Notice of Unavailability of COBRA Notice of Unavailability of Continuation CoverageContinuation Coverage From plan denying COBRA coverageFrom plan denying COBRA coverage
COBRA Notice of Early Termination of COBRA Notice of Early Termination of Continuation CoverageContinuation Coverage From plan describing why it is ending COBRA From plan describing why it is ending COBRA
benefits earlybenefits early
18
Notices and Election Notices and Election ProceduresProcedures
Election ProceduresElection Procedures
Each QB has 60 days to elect COBRA from Each QB has 60 days to elect COBRA from the later of:the later of: Date coverage is actually lost; orDate coverage is actually lost; or Date QB furnished an Election NoticeDate QB furnished an Election Notice
Each QB can elect independently to elect Each QB can elect independently to elect COBRACOBRA
A QB can waive COBRA and later revoke the A QB can waive COBRA and later revoke the waiver as long as it is done before the end of waiver as long as it is done before the end of the election periodthe election period
19
Duration of Continuation Coverage
* * In certain circumstances, QBs entitled to 18 months of continuation coverage may become entitled to a disability extension of an additional 11 months (for a total maximum of 29 months) or an extension of an additional 18 months due to the occurrence of a second QE (for a total maximum of 36 months).
Qualifying EventQualifying Event BeneficiaryBeneficiary CoverageCoverage TerminationTermination
Reduction of hoursReduction of hoursEmployeeEmployeeSpouseSpouseDependent ChildDependent Child
18 months*18 months*
Employee entitled to Employee entitled to MedicareMedicare
SpouseSpouseDependent childDependent child
36 months36 months
Divorce or legal separationDivorce or legal separation Death of covered employeeDeath of covered employee Loss of “dependent child” Loss of “dependent child”
statusstatusDependent childDependent child 36 months36 months
20
Extension of COBRA Extension of COBRA CoverageCoverage
Disability (additional 11 months) Disability (additional 11 months) ((covered EE, spouse, or dependent child)covered EE, spouse, or dependent child)
Disability would have to have stated at sometime before Disability would have to have stated at sometime before the 60th day of COBRA coveragethe 60th day of COBRA coverage
Disability must last at least until the end of the 18-Disability must last at least until the end of the 18-month period of COBRA coveragemonth period of COBRA coverage
The disabled QB notifies plan of disability determination The disabled QB notifies plan of disability determination w/in 60 days after the later of:w/in 60 days after the later of:
Date SSA issues disability determinationDate SSA issues disability determination Date QE occursDate QE occurs Date QB loses (or would lose) coverage due to the QEDate QB loses (or would lose) coverage due to the QE Date QB receives the COBRA General NoticeDate QB receives the COBRA General Notice
Total up to 29 monthsTotal up to 29 months
21
Extension of COBRA Extension of COBRA CoverageCoverage
(cont.)(cont.) Second Qualifying Event (additional 18 Second Qualifying Event (additional 18
months)months)
(spouse or dependent child)(spouse or dependent child)
Death of Covered EEDeath of Covered EE Divorce or legal separation of a covered EE and Divorce or legal separation of a covered EE and
spousespouse Loss of dependent child status under the planLoss of dependent child status under the plan Covered EE becomes entitled to MedicareCovered EE becomes entitled to Medicare
Total up to 36 monthsTotal up to 36 months
22
Early Termination of Early Termination of COBRACOBRA
The group health plan may terminate COBRA The group health plan may terminate COBRA early if:early if:
Premiums not paid in full on a timely basisPremiums not paid in full on a timely basis The ER ceases to maintain any group health planThe ER ceases to maintain any group health plan A QB begins coverage under another plan, as long A QB begins coverage under another plan, as long
as the new plan does not impose an exclusion or as the new plan does not impose an exclusion or preexisting condition on the QBpreexisting condition on the QB
A QB becomes entitled to Medicare after electing A QB becomes entitled to Medicare after electing COBRACOBRA
A QB engages in certain types of conduct (such as A QB engages in certain types of conduct (such as fraud)fraud)
23
Benefits Under COBRABenefits Under COBRA
A QB is entitled to the same benefits as a A QB is entitled to the same benefits as a similarly situated active EEsimilarly situated active EE Benefits, choices, and servicesBenefits, choices, and services
A QB is subject to the same rules and limits A QB is subject to the same rules and limits Co-payments, deductibles, and coverage limitsCo-payments, deductibles, and coverage limits
A QB must comply with rules of the plan A QB must comply with rules of the plan Filing benefit claims and following the appeals Filing benefit claims and following the appeals
processprocess
24
Who Pays For COBRA?Who Pays For COBRA? Plan limited to charging 102% of Plan limited to charging 102% of
premiums (for disability extension - premiums (for disability extension - 150%)150%)
Plan must allow QBs at least 45 days Plan must allow QBs at least 45 days from COBRA election to make initial from COBRA election to make initial premium payment. premium payment.
Must give a minimum 30-day grace Must give a minimum 30-day grace period for payment of any premiumperiod for payment of any premium
25
Alternatives to COBRAAlternatives to COBRA
When losing group health coverage, an When losing group health coverage, an individual should consider all the options:individual should consider all the options:
““Special Enrollment” in another group Special Enrollment” in another group health plan (spouse’s)health plan (spouse’s)
COBRACOBRA
An individual health insurance policyAn individual health insurance policy
State sponsored programsState sponsored programs
Affordable Care ActAffordable Care Act
Title I: Quality, Affordable Health Care for All Title I: Quality, Affordable Health Care for All AmericansAmericans
Market ReformsMarket Reforms
Coverage of All Americans Coverage of All Americans Tax Credits to Ensure AffordabilityTax Credits to Ensure Affordability
Affordable Care ActAffordable Care Act
Coverage of All AmericansCoverage of All Americans Shared ResponsibilityShared Responsibility
Individuals must maintain “minimum essential coverage” Individuals must maintain “minimum essential coverage” or pay a penalty (with some exceptions).or pay a penalty (with some exceptions).
Affordable Care ActAffordable Care Act
Shared Responsibility Cont.Shared Responsibility Cont.
Employer Shared Responsibility – Final RegulationsEmployer Shared Responsibility – Final Regulations
February 10, 2014February 10, 2014
For more information:For more information:http://www.irs.gov/uac/Newsroom/Employer-Shared-Responsibility
Affordable Care ActAffordable Care Act
Coverage of All AmericansCoverage of All Americans The Marketplace – “Exchanges” (State/Federal)The Marketplace – “Exchanges” (State/Federal)
Established to help individuals and small employers to gain Established to help individuals and small employers to gain access to coverage.access to coverage.
Qualified health plans at four different levels (platinum, gold, Qualified health plans at four different levels (platinum, gold, silver, and bronze).silver, and bronze).
One single, streamlined application and standard presentation One single, streamlined application and standard presentation
of information.of information.
Affordable Care ActAffordable Care Act
Tax Credits to Ensure AffordabilityTax Credits to Ensure Affordability New, refundable tax credits for certain AmericansNew, refundable tax credits for certain Americans
New tax credits for certain small businessesNew tax credits for certain small businesses
31
Questions?Questions?