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COBRA Insurance Information
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Illinois Insurance Facts
Health Insurance Continuation Rights -- COBRA
Revised March 2002 |
With the high costs of medical care, some form of health benefits is very
important to most individuals and families. No laws require employers to provide
health benefits for their employees or their families. However, if you are
covered by an employer's health benefits, it can be devastating to lose them.
State and federal laws give certain employees, spouses and dependent children
the right to continue employer-sponsored health benefits at group rates if they
lose their benefits because of specific "qualifying events." The type
of qualifying event determines who is qualified for continued coverage and for
how long.
This fact sheet provides specific information on the federal
continuation requirements under COBRA, the Consolidated Omnibus
Budget Reconciliation Act, and compares its basic provisions to two other
continuation laws: the Illinois
Continuation Law and the Illinois
Spousal Continuation Law. Under all three laws:
- The employer or plan administrator must notify you of your right to
continue your health benefits when certain qualifying events have
occurred. If both the state and federal laws apply to your situation, your
employer or plan administrator must offer you both options. You must choose
one or the other option.
NOTE: In some cases, the spouse or former spouse must notify the
employer and/or insurer that a qualifying event, such as divorce from
or death of the covered employee, has occurred. If you don't give proper
notification, you may lose your continuation rights.
- Once you are offered continuation, you must elect to continue coverage
within a certain time period, called the election period. If you
don't tell the employer you want to continue coverage before the election
period expires, you may lose your right to continue coverage. If you have
the option of either the state or federal continuations, once you make your
choice, if the election period has expired, you can't change your
decision.
- Coverage will continue for the maximum amount of time required by law.
However, coverage may end earlier in some cases, such as when the
beneficiary becomes eligible for Medicare, or if the employer no longer
offers any group health insurance benefits for employees.
- You must pay the entire premium for the coverage, including the
part you used to pay as well as the part the employer paid before the
qualifying event.
Your group insurance certificate, evidence of coverage or benefit plan
summary booklet explains your options and responsibilities in detail. You should
read the information now. Don't wait until you need your continuation rights.
| Comparison of Laws Pertaining to Continuation of Health
Benefits |
This comparison is a general comparison. For specific
information
regarding each continuation option, please refer to the specific Fact
Sheet. |
| Illinois Continuation |
Illinois Spousal Continuation |
COBRA |
| Must be offered to employer groups of any size. |
Must be offered to employer groups of any size.
Does not apply to HMO coverage.
|
Must be offered to employer groups with 20 or more
employees. |
| Must be covered for 3 continuous months before qualifying
event. |
Divorced or widowed spouses (any age), spouses (age 55 or
older) of retired employees, and dependent children must be covered on
the day prior to the qualifying event. |
Must be covered by the group plan on the day prior to the
qualifying event. |
| Must be provided upon termination of employment unless
termination is due to theft or commission of work related felony. |
Must be offered to divorced spouse or widowed spouse and
dependent children upon divorce from or death of employee. Must be
offered to spouse(age 55 or older) of retiree upon employee's
retirement. |
Must be offered to employee & covered dependents upon termination
of employment ; upon employee's retirement; upon reduction in employee's
hours;
Must be offered to spouse, former spouse & covered dependents
upon employee's eligibility for Medicare;
upon divorce or legal separation from employee;
upon death of employee;
upon loss of dependent child status under plan.
|
| Coverage must be the same as under group plan but need
not include extra benefits such as dental, vision or prescription drugs. |
Coverage must be the same as under group plan but need
not include extra benefits such as dental, vision or prescription drugs. |
The employer must offer the same coverages at the same
benefit levels as those offered to the rest of the group. |
| Coverage is for maximum of 9 months. |
Spouses under age 55 - Divorced or widowed spouse and dependent
children - coverage is provided for a maximum of 2 years.
Spouses age 55 or older - Divorced or widowed spouse or spouse of
retiree and dependent children - coverage is provided until spouse is
eligible for Medicare.
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Loss of employement or reduced hours - For employee and covered
dependents, maximum of 18 months. May be extended to 29 months if
disabled.
Divorce or legal separation from employee, death of employee or
employee entitled to Medicare - Maximum of 36 months for spouse, former
spouse and dependent children.
Loss of dependent child status - Maximum 36 months.
|
| Premiums may not exceed group rate. |
Spouses under age 55 - Divorced or widowed spouses premium may not
exceed group rate.
Spouses age 55 or older - Divorced or widowed spouse or spouse of
retiree, administration fee may be added to group rate after first two
years of coverage.
|
Premium may not exceed 102% of group rate.
Plan may charge 150% after 18 months if the 11 month extension for
disability is granted.
|
What Is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) is a federal
law, enforced by the US Department of Labor, Pension and Welfare Benefits
Administration, which provides continuation of group health coverage that
otherwise might be terminated. The law contains provisions giving certain former
employees, retirees, spouses and dependent children the right to temporary
continuation of health coverage at group rates.
Which Plans Are Subject To COBRA?
COBRA applies to group health plans maintained by employers who had 20 or
more employees on more than 50% of the business days in the prior calendar year,
and those sponsored by state and local governments. The following types of group
health plans are subject to COBRA:
- Insured and self-insured group health plans;
- HMOs;
- Employee assistance plans that provide benefits beyond just referral
services such as counseling sessions;
- Dental plans;
- Vision plans;
- Retiree health plans;
- Health flexible spending accounts;
- Employer discount programs maintained by health care clinics so that the
program is utilized exclusively by employees with health or medical needs;
- Employer reimbursed health insurance policies purchased to bridge coverage
under the employer's group health plan (certain restrictions apply).
Cobra does not apply to:
- Small employer plans (under 20 employees);
- Certain church plans;
- Plans sponsored by the federal government;
- Disability income plans;
- Life insurance and accidental death & dismemberment plans;
- Long term care coverage;
- Amounts contributed by an employer to a Medical Savings Account.
Who Is Eligible For Continuation Coverage Under COBRA?
A qualified beneficiary under COBRA includes an employee, spouse, or
dependent child who is covered under the group health plan on the day before the
qualifying event. A child born to or placed for adoption with a covered
employee during a period of COBRA coverage is also a qualified beneficiary if
COBRA has been elected and the child has been enrolled upon birth or adoption.
Qualifying Events for Employees are:
- Termination of employment, other than for gross misconduct;
- Reduction in hours;
- Notifying the employer that the employee will not return to work from a
Family and Medical Leave Act leave of absence.
Qualifying Events for Spouses are:
- Termination of the covered employee's employment, other than for gross
misconduct;
- Reduction in the hours worked by the covered employee;
- Death of the covered employee;
- Divorce or legal separation from the covered employee;
- Covered employee's voluntary termination of group coverage due to
enrollment in Medicare.
Qualifying Events for Dependent Children are:
- The same as for the spouse, plus
- Loss of dependent child status due to reaching the maximum age for
coverage, marriage, or completion of schooling.
NOTE: If you are covered by another group health plan or Medicare at
the time of the qualifying event, COBRA must still be offered. Coverage under
Medicare or other group health plans does not preclude you from electing COBRA
coverage in addition to the other coverage. (Effective January 1, 2000)
What Are The Notification Deadlines?
An employer must notify the plan administrator within 30 days after an
employee's death, termination, reduction in hours of employment or entitlement
to Medicare.
You must notify the plan administrator within 60 days after events such as
divorce or legal separation or a child's ceasing to be covered as a dependent
under the policy.
The plan administrator must notify you and your family members of your right
to COBRA coverage within 14 days after receiving information that a qualifying
event has occurred.
You must notify the plan administrator of your election of COBRA coverage
within 60 days after the qualifying event or after the date the notice to elect
COBRA coverage is sent, whichever is later.
How Much Will COBRA Continuation Coverage Cost?
You must pay the entire premium for the coverage, including the part which
was formerly paid by the employer. There may be a 2% administration fee added to
the premium. If coverage is extended for an additional 11 months due to a
disabling condition, the premium may be up to 150% of the applicable non COBRA
premium for months 19 through 29.
What Benefits Are Available With COBRA?
The benefits provided under COBRA coverage must be the same as under the
group plan. However, if you were covered by a region specific plan such as an
HMO and move from the service area, the HMO coverage may no longer be available.
If your employer offers other coverage options that can be extended to the new
area, those options must be made available to you.
How Long Does COBRA Continuation Last?
COBRA establishes a minimum period of coverage for continuation of health
benefits. A health plan may provide longer periods of coverage beyond those
required by COBRA. Under COBRA, an individual may be entitled to up to 18
months, 29 months, or 36 months of continuation coverage depending upon which
qualifying event(s) triggered the COBRA coverage. The following table
illustrates the maximum coverage periods for each qualifying event.
| Qualifying Event |
Who May Elect COBRA |
Maximum Coverage Period |
| Termination of Employment |
Employee and covered dependents |
18 months |
| Disability of employee or covered family member at time
of COBRA election or within 60 days after election |
Employee and covered dependents |
29 months |
| Divorce or legal separation |
Spouse and dependent children |
36 months |
| Death of employee |
Spouse and dependent children |
36 months |
| Entitlement to Medicare by covered employee before a
qualifying event |
Spouse and dependent children |
36 months after date of entitlement to Medicare OR
18 months (29 months if there is a disability extension) after the
covered employee's employment terminates or his hours are reduced.
|
| Loss of dependent child status |
Dependent child |
36 months |
COBRA coverage can be terminated when:
- You reach the last day of maximum coverage;
- You fail to make timely premium payments;
- The employer ceases to maintain any group health plan;
- You obtain coverage with another employer group health plan and have met
any waiting periods for preexisting conditions;
- You become covered by Medicare after COBRA was elected.
NOTE: If you are already covered by Medicare or another
group health plan, you can elect COBRA coverage in addition to the other
coverage. However, if you obtain Medicare or other group health coverage after
the election of COBRA, the COBRA coverage will be terminated.
What Happens When My COBRA Ends?
You or your dependents may be eligible to convert coverage to an
individual policy at any time during the continuation period or at the end
of the period, except when the continuing person becomes eligible for
Medicare. Check your policy to find out if a conversion policy is offered.
You may also want to shop around for an individual policy on your own.
You may be able to find better coverage at a more affordable rate. An
insurance broker in your area can assist you in applying for individual
coverage.
If you or your dependents have a medical condition which precludes the
purchase of individual coverage, the HIPAA CHIP plan offered by the Illinois
Comprehensive Health Insurance Plan may be an option when the continuation
policy expires. This plan provides coverage for individuals with an
uninsurable health condition, without preexisting condition exclusions or
limitations, if there has not been a break in coverage of more than 90 days.
We encourage you to apply for the HIPAA CHIP plan at least two months prior
to your COBRA coverage expiration in order to allow ample time for the
application to be processed. You should contact the Illinois Comprehensive
Health Insurance Plan (ICHIP) at (866)851-2751 or at http://www.chip.state.il.us/chip.htm
for an application.
NOTE: If you have a medical condition that renders you uninsurable and
you elect a conversion policy rather than HIPAA CHIP, you will lose your
rights to elect HIPAA CHIP. In other words, if you elect the conversion
policy and then decide, for whatever reason, to drop it, You will not be
eligible for the HIPAA CHIP plan. You will have to apply for coverage with
the regular CHIP plan, which sometimes has a waiting list and does not pay
for preexisting conditions for the first six months.
For More Information On COBRA
Call our Consumer Services Section at (312) 814-2427 or
our Office of Consumer Health Toll Free at (877)527-9431
or visit us on our website at www.state.il.us/ins
or;
Contact the US Department of Labor at (866) 275-7922
Web site: http://www.dol.gov/dol/pwba
Related Topics:
Health
Insurance Continuation Rights -- Illinois Law
Health
Insurance Continuation Rights -- Illinois Spousal Law
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