COBRA Health Insurance Coverage Continuation Law
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Of all the federal laws governing the workplace, COBRA (the Consolidated Omnibus Budget Reconciliation Act) is at the top of the list in terms of complexity and confusion. COBRA is basically a safety net for employees and their families to keep their health insurance, at their own expense, when they’re 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 and COBRA covers employers with at least 20 employees. Some states have similar laws that apply to smaller employers or require longer periods of continuation coverage.
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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.
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.
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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.
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The U.S. Department of Labor (DOL) is responsible for interpreting and administering the COBRA provisions that appear in the Employee Retirement Income Security Act (ERISA), while the 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
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.