COBRA – Continuation Of Health Insurance Coverage
NOTE: The laws surrounding continuation of health insurance coverage are both complicated and extensive. The following information is intended as an overview only. For more detailed information, please consult with your attorney or accountant.
COBRA/KENTUCKY CONTINUATION RULES
Both Federal (COBRA) and Kentucky law provide for continuation of group health insurance coverage for qualified employees and/or their dependents (COBRA applies to all employers with a total of 20 or more full time and/or part-time employees – Kentucky law applies to all others).
Federal law applies to any insured employee whose coverage has been terminated for one of the following reasons:
- Termination of employment
- Reduction in the number of hours worked
- The elimination of coverage, in whole or substantially in part, within one year before or after the commencement of bankruptcy by or against the group from whose employment the insured had retired at any time
The employee is entitled to continue his or her existing group benefits at no more than 102% of the then applicable group rate. Continuation of Coverage is also available to covered spouses and children who lose coverage, due to:
- The death of an insured employee
- Divorce from the insured employee
- The eligibility ofthe insured employee for Medicare coverage
- A covered child’s loss of dependency status
Continuation of coverage is also available to children born to, or placed for adoption with the insured, during a period of continuation of group coverage. Continuation of group coverage will terminate on the earlier of
- 18 months from the date the covered person’s coverage otherwise would have terminated because of the insured termination of employment or reduction in hours worked.
- 36 months from the date a covered person’s coverage otherwise would have terminated because of the employee’s death, divorce, coverage under Social Security, or a dependent child ceasing to be a dependent child.
- Death, for a retired insured continuing benefits due to the group’s bankruptcy, and 36 additional months for a covered person who is a surviving spouse.
- The date a covered person is entitled to Medicare or is covered by other group coverage.
- 29 months from the date of a qualifying event if the covered person is disabled under Title 11 or XVI of the Social Security Act at the time coverage ended, or becomes disabled at any time during the first 60 days of continuation of group coverage (150% of the applicable premium may be charged for the last 11 months of coverage).
- The date through which the covered person has paid the applicable premium.
- The date the group contract is terminated (if the group has obtained other coverage, the covered person may be eligible to continue benefits under the new plan).
It is the Employer’s responsibility to:
Notify all covered persons of their right to continue coverage; notify the Insurer of the qualifying event, the selection of a covered person to continue coverage and of the effective date of COBRA coverage and collect and forward premiums on a timely basis.
It is the Employee/Covered Person’s responsibility to:
- Notify and provide any documentation to the group within 60 days of;
- A separation or divorce from the spouse
- The birth or adoption of a child
- A change in a dependent child’s dependency status
- A Social Security disability determination
- Request in writing to continue group coverage, within 60 days after notice of that right has been given by the group.
- Pay the first applicable premium to the group within 45 days of the election date and pay the remaining premiums within 30 days of the due date.
Kentucky provisions are similar in nature, with a few notable exceptions.
Under Kentucky law, any person whose group coverage has been terminated will be entitled to continue benefits for him/herself and any covered dependents at the group rate, if such insured has been covered under the group, or any group coverage it replaced, for at least three months.
Continuation of Coverage is not available to a covered person who is covered by or eligible for Medicare or other group coverage.
Coverage will terminate on the earlier of:
- 18 months from the date the employee’s coverage otherwise would have terminated under the group contract because of termination of employment or membership in the group.
- The date through which the member has paid the group rate (on a timely basis).
- The date coverage is terminated and not replaced within 31 days by other coverage.
Continuation of coverage will be available to a surviving spouse and dependent children of the insured, upon the death of or divorce from the insured and, to any dependent child upon termination of dependency due to the attainment of the age limit under the policy.
Kentucky law provides for conversion of coverage to an individual health insurance policy, at the completion of the extended coverage period (regardless of whether coverage was extended under COBRA or Kentucky law). This may not always be the best option for the insured, but if elected, it does assure that there will be no loss of coverage.