1 COBRA Basics Q&A the following questions were asked during the two COBRA Basics webinar sessions in January 2014 Q: Is COBRA triggered by an insurance qualifying event for a current employee who is not leaving and not entitled to Medicare (for example, the birth of a child)? A: COBRA is only triggered by events which would cause the employee or the employee's spouse and/or dependents to lose their employer group coverage. The birth of a child would not cause the employee or the employee's spouse and/or dependents to lose coverage. The birth of a child is a HIPAA special enrollment right to either add that child to the employee s existing coverage or for the spouse to enroll in their coverage to cover the child and family members. If that occurred, the employee might drop their coverage to become covered by the spouse s plan, but it is not a COBRA event. Q: Does a Qualifying Event occur if an employee drops coverage due to financial hardship? A: A Qualifying Event never occurs for an employee who voluntarily drops coverage, even if due to financial hardship. Q: So financial hardship would be a voluntary loss of coverage and therefore COBRA should not be offered, is that correct? A: Correct. Remember, there are only six triggering events that are recognized as the reason when coverage is lost that COBRA is offered. The employee being unable to pay the premiums for active employee coverage is n not a triggering event. Q: Does the health FSA grace period apply to COBRA QB'S? A: The health FSA Grace Period applies to participants who were in the health FSA on the last day of the plan year and have a balance remaining in their health FSA accounts. So, the Grace Period would apply to a participant only if the COBRA QB pays the COBRA premium all the way until the end of the plan year and has a balance in their account on the last day of the plan year. Q: What if we renewed our health plan early and changed the COBRA premium in December instead of in January? (For us it was actually a reduction in premium.) Should we be going back to the COBRA participants and asking them to pay the difference between the old premium and new premium? A: The COBRA regulations and the Determination Period requirements regarding changes in premium for QBs are basically targeting increases in the QB s premium, not decreases. Therefore, decreasing the QB s premium during the Determination Period is not an issue. In this case, the QBs should be allowed to continue at the lower rate.
2 Q: If separate initial notices are required for different plans, does EBC need to receive notice when an employee adds or drops a plan. For instance, we offer health, dental, and a health FSA. Some employees use our FSA in alternate years with the spouse's health FSA or go on and off dental coverage in years where they expect higher usage. Do we need to notify you that the employee's coverage changed even though the health coverage continued year after year? A: From this question, we are providing COBRA administration for you. The regulations require an Initial Notice at the time of the commencement of coverage by an employee or when that employee changes coverage, such as enrolling a spouse, new dependent, or switching coverage from one plan offering to another, such as from HMO coverage to PPO coverage. In addition, this requirement applies to each separate health plan that you offer, in this case your health plan, dental plan and health FSA, unless you treat all three as one health plan for ERISA s Form 5500 filing status. So, when an employee enrolls in the dental plan, you furnish an Initial Notice. If that employee drops the dental plan and subsequently re-enrolls, you furnish another Initial Notice. For the health FSA, if you have our BESTflex Plan, the Summary Plan Description (SPD) that each enrolled employee is to receive each year contains the required COBRA information that satisfies the Initial Notice requirements. Q: When you speak of an HRA, are you discussing a MERP (an unfunded HRA) or funded accounts? A: A Medical Expense Reimbursement Plan (MERP) is an HRA. An HRA and MERP are health plans, in the regulator s eyes, and are subject to COBRA whether unfunded (the company uses its general assets to provide the reimbursements) or funded (the employer uses a segregated account or trust account to provide the reimbursements). Q: In Wisconsin, we CANNOT add the COBRA fee to health insurance but we can for dental, vision, HRA,FSA, etc.? A: Correct. Wisconsin s state continuation regulation applies to health insurance, only, and does not allow charging the 2% COBRA fee. Even if your HRA is integrated with your health plan, Wisconsin s continuation regulation does not apply to the HRA, so you can charge the 2% for the HRA. We asked this specific question of the Wisconsin OCI and got this response: Wisconsin s continuation law applies to the insurance policy. It does not apply to HRA benefits. If you have additional questions, please feel free to contact me. Diane Dambach, Chief Accident & Health Insurance Section Bureau of Market Regulation (608)
3 Q: So if we have the same health insurance but our rates increase we cannot translate that increase onto the people who are on COBRA? A: if the rates increase during the 12-month Determination Period, the regulations say the employer cannot pass the premium increase on to the QBs until the start of the next Determination Period. Q: But if they increase at the beginning of a plan year and haven't changed in the year prior that is okay? A: Correct, as long as your Determination Period and plan year are the same 12-month period. Q: What happens with the remaining dollars in a health FSA account that have not been spent, if the employee does not elect COBRA? A: They get forfeited back to the employer following the run out period of the plan. Q: Can you speak to the 'maximum coverage ' more...? A: I think this question is asking about the maximum coverage period for COBRA continuation. For loss of coverage due to termination of employment or reduction in hours the maximum coverage period is 18-months. For loss of coverage due to the death of the employee, divorce from the employee or loss of dependent child status, the maximum coverage period is 36-months. The maximum 18-month period can be extended due to total disability for an additional 11-month period for a maximum coverage period of 29-months. If a 36-month event occurs during the original 18-month coverage period, the surviving family members, ex-spouse or dependent child are provided a 36-month period counted from the original loss of coverage date that prompted the 18-month period. Q: if a Qualified Beneficiary has a health expense that occurs after the qualifying event, but before they have made their COBRA election, will the expense be covered under the COBRA coverage if they do elect it? A: Yes, because COBRA coverage always goes back to the date of the loss due to the event. Q: Please clarify that if the health plan does not charge the 150% of premium in the case of a COBRA disability that the employer can charge this amount and are there limitations that the employer would have regarding this excess premium since the health plan is not charging it? A: These extra fees are charged by the employer and are not imposed as part of the premium by the health carrier. This is for employer s administration costs.
4 Q: Please clarify that if an employee drops coverage on a spouse, say 4 months prior to a divorce, that COBRA would actually only be triggered when a divorce is final; that the exspouse could have a lapse in coverage. I understood that one could not qualify as a QB unless they were covered the day prior to the event. A: Generally, the regulation requires that an employee, spouse or dependent child be covered by the plan the day prior to the qualifying event. However, there is an exception in the regulation regarding spouses or dependent children who are dropped by an employee in anticipation of divorce. If an employee drops their spouse and/or dependent children in anticipation of divorce, then the spouse and children must still be offered COBRA when the divorce is finalized, even though they weren t covered the day prior to the divorce. Consequently, since they weren t covered the day prior to the divorce this would cause a lapse in coverage for the intervening period. Q: For an employee that is being terminated but being offered a severance package including several months of 100% paid benefit coverage by the employer, would COBRA coverage start at date the employee terminates or at the end of the paid benefit severance? A: Under COBRA, you have two choices 1) offer COBRA at termination and provide employer payment of the first several months of the 18-month COBRA period; or 2) postpone the loss of coverage until the end of the severance period and offer COBRA when the severance period is over. Q: When sending continuation notice - do you send minor children their own? Do we need to offer single coverage for a minor child? A: Any qualified beneficiaries living at the same address can be included on one notice. If there is knowledge of separate addresses, a notice should be sent to each separate address. If the parents waive the COBRA coverage, they can elect single coverage for their child. The child would be on a single plan at the premium rate for single plan coverage for active employees. Q: If a third party administers the HRA, is it considered integrated, rather than it being integrated with the carrier. Especially when HDHP are purchased by the group and funding the deductible and sometimes co-pays by a third party. The employer offers the funding for all that are on the medical plan. A: An integrated HRA simply means that the only employees covered by the HRA are also enrolled in the employer s group medical plan. That integrated HRA could be administered by the insurer, self-administered by the employer or administered by a third party.
5 Q: How does the same sex marriage decision affect change of coverage for a common law spouse (state of Texas)? A: The federal interpretation of spouse means only legally married same or opposite sex couples and does not include common law marital status that the state might recognize. Q: If an employee waived medical insurance coverage and is not on the plan when they terminate employment, do they still need to be offered COBRA? A: No, COBRA is only offered to qualified beneficiaries who were covered the day prior to a qualifying event. Q: If an employee is on health insurance and has been provided the Initial COBRA Notice and then adds dental insurance at open enrollment, does the employee need to receive an Initial COBRA Notice for the dental insurance? A: Yes, technically an employee is to get an Initial Notice when coverage in a plan offered by the employer commences, the employee adds a spouse or dependent to the coverage or changes plan types (like HMO versus PPO). If the dental plan is a separate plan, then the initial notice requirements apply separately to the dental plan from the health plan. Q: For health FSA, what if the person had elected $1200 for the year, termination occurs six months into the year, and they have had $600 in deductions and received $600 in reimbursements. Can they do a $100 COBRA premium and claim the remaining $600 they had originally elected? A: No, in this situation, COBRA would not be offered to the employee because the account is not under spent. The only time that COBRA is offered for the health FSA regardless of account status is when the health care FSA is a non-excepted benefit. Q: If they were underspent (they had been paid $400 and deducted $600), we would offer the health FSA under COBRA. In that case, would they be able to pay one month ($100) and receive the maximum they had elected (the $1200)? Or would the maximum be their deductions ($600 plus the new $100)? A: They could elect COBRA, pay for one month and claim the entire remaining portion of the election; in this example, the COBRA premium would be $102 ($1,200/12 months x 102%), and the remaining amount that could be claimed is $800 ($1,200 election - $400 claimed to date).
6 Q: Can a person who was eligible for the employer's health plan but didn't choose it choose to opt into the plan during the COBRA period during the next open enrollment? A: A qualified beneficiary who has elected COBRA for any of the employer s plans is able to enroll in other group health plans offered by the employer during open enrollment. Qualified Beneficiaries must be provided the same rights during open enrollment as active employees. Q: Under a former employee s retirement contract, he is to be terminated from the retirement coverage because he is 65 years old. Would this deem him eligible for COBRA along with his wife, (who was a qualified dependent)? A: Retirement health coverage is the source of much confusion for how COBRA applies. Under the regulations, an employer has 3 options that all comply with COBRA: 1) Offer COBRA at retirement and let the COBRA 18-month period for termination (retirement) run concurrently with the employer s retirement benefit. If the retirement benefit runs longer than COBRA, that s fine. But, the remainder of the retirement benefit is no longer COBRA, just an employment benefit, and there is no COBRA to offer anyone when that coverage eventually ends because the 18-months of COBRA has already been exhausted; or, 2) Postpone the offer of COBRA and just provide the retirement benefit. If any qualifying event occurs within the first 18-months following retirement, then COBRA gets offered for that event from the event date (e.g., retiree dies 6 months after retiring, surviving spouse is offered COBRA for 36-months from date of death). If the loss is postponed more than 18- months, there is no COBRA to offer because the retiree already received more than the required 18-month continuation period; or, 3) Offer COBRA at retirement, at employee expense, or alternative retiree coverage if COBRA is waived. If COBRA is waived, the retiree receives the employer s retiree benefit. Family members covered under the retiree s alternative coverage retain COBRA rights to the alternative retiree plan and would be offered COBRA at the time of any loss due to a COBRA qualifying event, including loss of the alternative plan due to the Medicare entitlement of the retiree not just the retiree s eligibility for Medicare. So, if you didn t offer the retiree COBRA when he left with the caveat that if he waived COBRA he d get the retirement benefit and the loss of coverage is occurring more than 18-months after retiring, there is no COBRA to offer him or his wife now. Q: Regarding notices, do I, as the employer have to send out notices even though EBC sends out the COBRA packets? A: No. When a third party is hired to provide COBRA administration, the employer is meeting its COBRA obligations through the COBRA administrator as long as the COBRA service provider complies with the COBRA rules.
7 Q: What is a notice of divorce? Verbal, Written, Hearsay? A: Verbal or written notice from the employee or ex-spouse to the employer is considered notice of divorce. Q: What qualifies as "notice" - verbal notice or written? A: From employer to employee, it should be written. From employee to employer, it could be either. Q: All employees eligible/enrolled for healthcare are also eligible/enrolled in HRA, it is not an option for the employees; therefore do we have to require COBRA for both if the employee wants healthcare COBRA? A: Yes. Since the employees automatically get enrolled in the HRA and do not separately enroll in it, the COBRA QBs must elect COBRA for the health plan with the HRA as a package or waive COBRA for the two benefits. Q: When adding a spouse during COBRA, must the terminated employee add the spouse within 30 days of this qualifying event - the marriage? A: Marriage provides a HIPAA special enrollment right for the QB to add the new spouse as of the date of the marriage, if requested in advance, and no later than the first of the month following 30 days of the notice of marriage if requested after the marriage. Q: How do employees know that they have to report a divorce within 60 days in order to be eligible for COBRA? As an employer, if I don't know about the divorce, how can I tell the employee he/she has 60 days to report this? Would the employee come back and say- you didn't tell me? A: The COBRA Initial Notice that is provided when the employee first enrolls in a health plan or adds a spouse to that plan includes the rules for notifying the employer or COBRA administrator of the divorce. Q: COBRA and the HRA...we have a former spouse of a former employee of ours who has been on our medical plan for at least 4 years (we are in MN and they can remain on our plan until enrolled in another group plan...so, they can be on indefinitely). This former spouse of a former employee has an HRA through us. He pays the full premium amount each month, plus the 2% because we are in MN. We have a HDHP of $9,900. The deductible is shared 70 % paid by us and 30% paid by the employee or in this case, former spouse of former employee. He simply pays us 102% of the premium. Are we doing this right? A: Our understanding of Minnesota continuation is that the continuation rights do not apply to HRAs. Consequently, this is an example of where the COBRA rules would apply to the health plan and HRA for the first 36-months following the divorce. When the 36-months
8 COBRA period was exhausted, the ex-spouse would no longer have been eligible for the HRA or health plan through COBRA but can continue the health plan, under Minnesota continuation. Q: COBRA and the health FSA. If the employee quits mid-month and their last day is the 16th...we would take a deduction on the 15th of the month payroll and then stop elections. We would not take a final deduction on the 30th of the month payroll...correct? A: That is correct. For the health FSA, eligibility is lost the day of the event, not end-ofmonth. Therefore, technically, no deductions should occur for the health FSA after the event date. Q: If a laid off employee has already had premiums withdrawn from his paycheck for the next month's health premiums, is it ok that the employer not put him/her onto COBRA until the end of the following month since the premium has already been paid? A: Under COBRA, you can postpone the loss due to an event and offer COBRA when the loss occurs as long as the loss occurs within the maximum coverage period, in this case 18- months. This question really is for the insurer, since they would be agreeing to keep an individual on for an extra month after they lost eligibility. Absent postponing the loss, you could offer COBRA at the time of the lay off and charge a COBRA premium for the first month that takes into account what you ve already deducted from pay. Q: How do you know if an individual is enrolled in Medicare once they retire? A: The carrier may know, but the QB should be notifying the former employer or COBRA administrator of this event just as they should be notifying them of other events such as divorce or a dependent aging out. Q: How would I complete a COBRA event form for a QB when the company is providing severance and payment for 3 months of COBRA premiums for the QB? A: Since the QB is offered COBRA at the time of termination, then the employer completes the event form indicating the normal information about the date of loss, type of event, etc., and indicates that the first 3 months worth of COBRA premiums will be paid by the employer. Then, if the employee does not make the 4th month premium payment, the COBRA coverage would terminate. Q: So under Health Care Reform, we can still offer a health FSA to an eligible employee - they do not actually have to enroll in our group health plan in order to have a health FSA. Is this correct? A: That is correct. The employee simply has to be eligible for the group health plan at the time you offer that employee the health care FSA.
9 Q: Where can I get a copy of an "Initial Notice"? A: The Department of Labor has models of the various required COBRA notices on its website. Just Google DOL or EBSA. Q: Is the initial notice that is provided when 1st enrolled different than the notice provided to someone when retiring? A: Yes, the Initial Notice is provided when first enrolled in the plan. The Election Notice is provided when a COBRA qualifying event occurs. Q: I still have Cobra dental with my previous employer and dental with my new employer. A: Technically, if you enrolled in the other employer s dental plan after electing COBRA from your former employer, you should have notified either your former employer or their COBRA administrator that you became enrolled in another employer s group dental plan when that coverage became effective. Your former employer s dental plan coverage is subject to early termination due to enrollment in another employer s group plan after electing COBRA. Q: Isn't the qualification for COBRA eligibility that the Employer had to have AVERAGED 20 or more employees over the previous 12 month time frame? A: The COBRA count is that the employer averaged more than 20 full time equivalent employees on more than 50% of the employer s regular work days in the prior calendar year. Q: We changed our insurance carrier and plan offerings early, resulting in lower premiums for employees. Can I change the premium for the QB to reflect the lower cost? A: Yes, due to the change in carrier, this would be allowable even if the premium increased due to the change in carrier and renewal date. Q: How formal does that 'change of premium' notice need to be? Can I send a regular letter? A: If you are administering COBRA yourself, a letter is fine. Q: If an employee voluntarily leaves employment and has been offered health insurance at their new employment, can they still choose COBRA coverage? A: Whether your employee terminates employment voluntarily or you terminate the coverage involuntarily, you still offer COBRA to that former employee (unless you
10 characterize the involuntary termination to be due to gross misconduct ). That employee can elect COBRA and only loses your COBRA when and if they enroll in (not just become eligible for) another employer s group health plan. Q: I thought that a terminated employee who elects COBRA for the health FSA would have to pay the total remaining for the year to reopen the flex account. Is this not true? A: This is not true. To reopen the health FSA account, the employee must elect COBRA and pay monthly premiums to keep the account open. But, COBRA is a monthly payment. There is never a requirement to make multiple payments at a time. Q: Question on deductible. If at the time of a Qualifying Event the employee already paid $1,000 towards their deductible, when they elect coverage through cobra will that $1,000 be carried over to their coverage through COBRA? A: Yes. When they elect COBRA, their coverage is reinstated at the point that they lost the coverage with all of the coverage brought up to that date as if the plan had never been lost. Q: If a former employee is on COBRA (Family Plan) for only two months and they are then entitled to go on a medical plan through a new employer, do they have to terminate coverage for the family if only enrolling as an individual - can the family still stay on for COBRA for remainder of 18 months? A: Yes. Each qualified beneficiary covered under the COBRA plan only lose their COBRA coverage when they become enrolled in another employer s group health plan. So, in this example, the former employee can enroll in the new employer s health plan as a single enrollee and the former employee s COBRA coverage would end but the remaining family members would still be on COBRA for the remainder of the 18-month period. Q: Is the QB still covered during the 60-day election period? A: No. The QB has to elect COBRA and pay at least the first month s premium for the coverage to be reinstated back to the date of loss for the first month of COBRA to be covered. Q: What about termination in anticipation of divorce? A: I think what you mean is an employee dropping a spouse and/or dependent children in anticipation of divorce. If so, COBRA would be offered to the employee's ex-spouse the day after the divorce regardless of the fact that the spouse was not covered on the date of the event. The COBRA coverage would begin the date of the divorce, so there would be a lapse in coverage between the time the employee dropped the spouse and the date of the divorce.
11 Q: We create an HRA for certain employees upon termination. Some employees remain in our group plan and some do not. Would COBRA apply? A: COBRA would apply to the group health plan. The HRA, in this example, did not cover the employee the day prior to the event, so it is not subject to COBRA. The former employee would simply receive the HRA as a benefit provided to ex-employees. Q: Is the employer required to know when a covered child reaches 26 years old and send notification for COBRA? A: it is the employee's responsibility to notify the employer that their covered child is reaching 26 years of age losing dependent status. Some insurers and third party administrators have undergone dependent status monitoring and notify the employer and employee that a child is reaching the limiting age for the plan. In that case, the employer could use that notice as the proxy for the employee s notice and send out the COBRA Election Notice for that child. Q: Can you clarify? Can we, as an employer in Wisconsin, charge a 2% administrative fee for COBRA? A: Wisconsin state continuation applies only to an insured group medical plan, not dental, vision, etc. Under Wisconsin state regulation, an employer cannot charge more than the actual premium for the insured medical plan to a QB (i.e., 100% not 102%). Therefore, you cannot charge the 2% fee on the insured medical plan. But, you can charge the additional fee on the other group plans that are subject to COBRA. Q: Please expand on the affidavit EBC uses as proof COBRA notices/elections have been sent. What does the government language state that employers can use as acceptable means of proof COBRA notices have been sent? For example, could we use a mailing log that includes name of who we sent the COBRA form to that our mailroom staff signs off indicating what date they ve mailed the document? A: We save an electronic version of the letter including the date it was mailed. Since you are administering COBRA yourself, we recommend that you keep a copy of the notice. As for proof of the date, signing off what date they mailed the document should be sufficient. Q: Please provide sample language stating the employee s timeframe to get election notice back to employer - especially if we send the notice way in advance to dependents turning 26. Comment how far in advance do you recommend we send out a COBRA notice to a dependent turning age 26? A: The individual has 60 days from the Qualifying Event date (date of loss) or, if later, from
12 the date the Election Notice was mailed. We typically recommend offering COBRA close to the Qualifying Event date perhaps a month prior - to ensure that the situation does not change in the meantime Q: If a group has an HRA plan that is embedded in the health plan, is offering the HRA as a COBRA eligible benefit mandatory under Federal COBRA law? Or can the group decide whether they want the HRA to be available as a COBRA eligible offering? A: An HRA is a group health plan and subject to COBRA continuation. Therefore, it is mandatory to offer the HRA for COBRA continuation. If active employees who enroll in the group health plan are automatically enrolled in the HRA, then QBs must be offered the group health plan and the HRA as a packaged deal (all or nothing), however, the employer can charge a premium for their HRA. Q: Under the new rules for large employers (those with more than 50 employees) that will go into effect January 1, 2015, if an employee losses their health plan coverage because they are no longer considered an eligible employee after the measurement period is that a qualifying event and do you have to offer COBRA? A: Yes. Under the rules regarding measurement and stability periods, an employee would be losing eligibility because their hours were reduced during the measurement period so that they don t qualify as an eligible employee for the next stability period. Reduction in hours is a COBRA triggering event requi8ring the offer of COBRA when that employee loses coverage due to the event. Q: In the question above, it would be a variable hour employee who qualified during the 1st measurement period and they were offered coverage for the 1st stability period. During the 2nd measurement period they no longer qualify and they are removed from coverage at the start of the 2nd measurement period. They would qualify for 18 months of COBRA starting at the start of the 2nd stability period, correct? A: That is correct based on our understanding of the guidance that applies to measurement and stability periods. Q: What if an employee who had a spouse and/or dependents on their plan doesn t enroll them during open enrollment and the employer does not realize this is in anticipation of a divorce? A: There is no obligation on the part of the employer to monitor why certain spouses or dependents are dropped from the plan. The responsibility to notify the employer or plan administrator of a divorce resides with the employee.
13 Q: If the employer offers to pay for medical coverage as part of a severance agreement, then the 18 month COBRA period starts after the severance period? A: When you offer severance you have two choices for how to apply COBRA: 1) offer COBRA at the time of the loss and, if COBRA is elected, pay the COBRA premiums for the duration of the severance the 18-month COBRA period would begin with the loss not at the end of the severance; or, 2) postpone the loss of coverage until the severance payment is exhausted and then offer COBRA from that date if the severance lasts less than 18-months the COBRA 18-month period would start after the severance payments end. Q: In regards to an employee's termination and they elect COBRA for the HRA, if the employer has a $2,000 individual deductible on the plan, and has it set up that the employee will pay the 1st $1,000 and the employer s HRA will pay the 2nd $1,000 of the deductible, is the employer still obligated to pay that 2nd $1,000? A: Yes, the employer is still obligated to pay out claims in the same manner as it would for an active employee. Q: If an employer provides 6-months of severance, can you choose to send out the COBRA notification the first month after the termination of employment instead of waiting until the 6 months of health plan coverage expires? If you do so, does the former employee still have to elect COBRA within 60 days from the notice even though they are still covered under the health insurance plan and will continue to be for the next 6 months? A: Under this scenario, you can choose to postpone the offer of COBRA until the severance is over or offer COBRA immediately and pay the first 6-months of the COBRA premium. Consequently, the issue of when to send the COBRA Election Notice is determined by when you decide that the loss actually occurs. Q: So the 2% additional fee for the premium can only be applied to the health insurance premium and not the dental premium (in Wisconsin) A: No, it is the opposite. In Wisconsin, an employer cannot bill more than the full cost of the medical premiums. For non-medical premiums, such as dental, 102% can be billed.
14 Q: If our health insurance premiums are based on 5 year age brackets and the former EE crosses over to the next bracket while on COBRA can we pass that increase on to the former EE in COBRA premiums? A: This is going to depend on how the insurer implements that new age bracket either as soon as the individual attains the new age or at the start of the next plan year after attaining the new age. Technically, once the 12-month Determination Period begins, an employer can t charge premium rate increases to a Qualified Beneficiary until the next Determination Period. So, if the insurer increases the premium mid-year due to the new age, that increase is supposed to be absorbed by the employer. Conversely, if the insurer doesn t increase the premium immediately and waits until the next Determination Period, than that is when the QB would be charged the increased premium. Q: Can the premium for a QB increase during the year because of a birthdate that increased their premium? A: No, their premium must remain stable for the determination period. Q: We have an employee currently on COBRA for the medical plan but did not include a HRA premium. What now? A: If the HRA for active employees is provided automatically if the employee enrolls in the medical plan, then at the start of the next Determination Period, you can inform the QB that they must pay the premium for HRA coverage or their COBRA coverage for the medical plan will end. Q: Our Cobra provider has never asked us where all of the family members on a policy live so they can send multiple notices...so how do they know? A: Most likely, they assume that they all live in the same residence. When we are administering COBRA, we provide a space on the Qualifying Event Notice form for our clients to provide the last known address of all QBs, so if there are different addresses, we send a notice to each QB that is at a different address. Q: If a terminated employee chooses COBRA and does not send payment when it is due per the health plan billing, is the former employer obligated to pay? If not, won't the health plan cancel coverage? A: Yes, the COBRA QB has their coverage retroactively terminated which will produce an adjustment on the employer s billing from the insurer. Most insurers bill in the month prior
15 to the coverage month with payment due by the first with a grace period for the employer to pay the billed amount for all of the covered individuals on the plan within a certain number of days. That monthly billing is always subject to adjustment by the insurer due to changes in enrollment (e.g., some changes from single to family after the billing was produced) including COBRA QBs who don t pay their premium timely and get retroactively terminated. The employer, conceivably already paid the insurer but the insurer would then adjust a future billing to reflect that the employer overpaid for a prior month. Q: Would COBRA be offered for an employee that was injured outside of work and is on short-term disability? A: This all depends on when, if at all, the employee loses coverage (eligibility) for the health plan due to being disabled. The issue of being on short term disability has no bearing, other than the fact that since the disability plan is paying benefits, the employee might not still be on paid status with the employer. You d need to address any issues related to FMLA and its interaction with eligibility rights and COBRA.
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