Continuation of Benefits

Continuation of Benefits COBRA Healthcare Plan Employee Rights Federal Law
A right conferred by federal law on employees and their spouses and dependents to continue participation in an employer-sponsored healthcare plan even after their coverage is terminated due to specified events such as death or divorce of the employee.
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Definition

Continuation of Benefits is a provision under federal law that allows employees, their spouses, and their dependents to extend their participation in an employer-sponsored healthcare plan even after losing coverage due to specific life events such as termination of employment, death of the covered employee, or divorce. This provision is commonly known under the Consolidated Omnibus Budget Reconciliation Act (COBRA), though the acronym does not directly represent “continuation of benefits.” COBRA ensures that individuals can continue to access healthcare coverage for a limited period under certain conditions.

Examples

  1. Termination of Employment: An employee who is laid off from their job can continue their health insurance coverage under COBRA for up to 18 months.
  2. Death of an Employee: The surviving spouse and dependents of a deceased employee can continue the health insurance coverage for up to 36 months.
  3. Divorce or Legal Separation: A divorced spouse and dependents can maintain health insurance coverage under COBRA for up to 36 months after the divorce is finalized.
  4. Reduction in Working Hours: If an employee’s hours are reduced, causing them to lose eligibility for health insurance, they can continue their coverage under COBRA.

Frequently Asked Questions (FAQs)

  1. How long can COBRA coverage last?

    • COBRA coverage can last from 18 to 36 months depending on the qualifying event.

  2. Who is eligible for COBRA continuation?

    • Eligible individuals include employees, their spouses, and their dependent children who were covered under the employer’s health plan before the qualifying event.

  3. How is COBRA coverage paid for?

    • The individual must pay the entire premium for the coverage, including the share previously paid by the employer, plus a 2% administrative fee.

  4. What is the time frame to elect COBRA continuation coverage?

    • Qualified beneficiaries have 60 days from the date they receive the COBRA election notice to choose continuation coverage.

  5. Can COBRA coverage be terminated before the maximum period ends?

    • Yes, COBRA coverage can be terminated early for reasons including failure to pay premiums, the employer ceasing to maintain any group health plan, and the qualified beneficiary obtaining coverage under another group health plan.
  • Consolidated Omnibus Budget Reconciliation Act (COBRA): A federal law enacted in 1986 that provides eligible employees and their families the right to continue health benefits under the employer’s group health plan.
  • Qualifying Event: Specific events that trigger the right to COBRA continuation coverage, such as termination of employment, reduction of hours, divorce, death of the employee, and others.
  • Qualifying Beneficiary: Any individual who was covered under a group health plan on the day before a qualifying event and who is eligible to elect COBRA continuation coverage.

Online Resources

Suggested Books for Further Studies

  • “COBRA Handbook” by HR Specialist Editorial Staff
  • “Healthcare Benefits Guide” by Michael D. Thomas
  • “The Complete Guide to COBRA Eligibility: An Employee’s Handbook” by Linda Hollins
  • “Employee Benefits and COBRA 2018-2019: Compliance Guide” by Wolters Kluwer Editorial Staff

Fundamentals of Continuation of Benefits: Federal Law and Healthcare Basics Quiz

### What federal law provides the right to continuation of health benefits after losing coverage? - [ ] Affordable Care Act (ACA) - [ ] Health Insurance Portability and Accountability Act (HIPAA) - [x] Consolidated Omnibus Budget Reconciliation Act (COBRA) - [ ] Employee Retirement Income Security Act (ERISA) > **Explanation:** The Consolidated Omnibus Budget Reconciliation Act (COBRA) is the federal law that provides individuals the right to continuation of health benefits after losing coverage due to specific life events. ### Which of the following is considered a "qualifying event" for COBRA continuation coverage? - [ ] Promotion in the company - [ ] A raise in salary - [ ] Maternity leave - [x] Divorce from the covered employee > **Explanation:** Divorce is considered a "qualifying event" under COBRA, allowing the divorced spouse and dependent children to continue health coverage. ### How long can COBRA coverage typically be extended after employment termination? - [ ] 6 months - [ ] 12 months - [x] 18 months - [ ] 24 months > **Explanation:** COBRA coverage can typically be extended for up to 18 months after employment termination. ### What is the maximum period for COBRA coverage extension in the event of the employee’s death? - [ ] 12 months - [ ] 18 months - [ ] 24 months - [x] 36 months > **Explanation:** In the event of an employee's death, the surviving spouse and dependents can extend COBRA coverage for up to 36 months. ### Who pays for the COBRA coverage? - [x] The individual who elects COBRA continuation coverage - [ ] The previous employer - [ ] A government subsidy - [ ] A combination of the government and employer > **Explanation:** The individual electing COBRA continuation coverage is responsible for paying the full premium, including the share previously paid by the employer, plus a 2% administrative fee. ### What percentage of the premium can be charged for COBRA continuation coverage? - [ ] 50% - [ ] 75% - [x] 102% - [ ] 150% > **Explanation:** Under COBRA, the individual may be required to pay up to 102% of the premium cost (100% of the coverage plus a 2% administrative fee). ### If a person finds new employment within the COBRA coverage period, what can happen to their COBRA coverage? - [ ] It automatically cancels - [x] It can be terminated if the new employer provides a health plan - [ ] It remains the same regardless of new employment - [ ] The old employer must still pay the premiums > **Explanation:** COBRA coverage can be terminated if the individual secures a new job that offers a group health plan. ### Why might an individual choose COBRA coverage instead of immediately enrolling in a new employer's health plan? - [ ] COBRA coverage is cheaper - [x] COBRA coverage allows for continuity of care - [ ] New employer coverage is inferior by law - [ ] It's mandated by federal law > **Explanation:** An individual might choose COBRA coverage to maintain continuity of care, such as keeping the same healthcare providers. ### When must an employer notify an employee of their COBRA rights? - [ ] At the time of hire - [ ] Annually during open enrollment - [x] Within 14 days of a qualifying event - [ ] Only if requested by the employee > **Explanation:** Employers are required to notify an employee of their COBRA rights within 14 days of a qualifying event happening. ### Which entity is responsible for handling the administration of COBRA premiums? - [ ] U.S. Department of Labor - [ ] Internal Revenue Service (IRS) - [x] The employer or a third-party administrator designated by the employer - [ ] An insurance marketplace > **Explanation:** The employer or a third-party administrator designated by the employer is responsible for COBRA premium administration.

Thank you for exploring the concept of Continuation of Benefits and participating in our example quiz. Strive for excellence in your understanding of federal healthcare laws and ensure security for you and your dependents during significant life transitions!

Wednesday, August 7, 2024
Continuing Education
Contingent Rent
COBRA (Consolidated Omnibus Budget Reconciliation Act) January 1, 1

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