Employers and employees are going to be facing many challenges over the next few weeks and months as we come to grips with the COVID-19 pandemic. The impact on your company and your employees can be devastating. In our industry the big question is how to continue to provide quality health insurance to your employees in the most cost-effective manner. For every company the answer to this question will be different. If you are cutting back on your work force whether through furloughs or layoffs, your employees do have the option to continue their health care at their cost through several vehicles. The option depends on your group size as well as where you are located. Below is additional information about COBRA and State Continuation along with all the forms you need to fulfill your responsibility. If you are a large employer, you may have a COBRA administrator that handles this process for you. Either way, Saratoga Benefits is here to help and answer any questions you may have.
For employers with 20 or more full time equivalent employees, your employees will have the ability to keep their group health plan under COBRA. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their families the right to choose to continue their health care benefits for a limited time if their health care coverage is lost due to a qualifying event. These qualifying events include but are not limited to voluntary or involuntary job loss, reduction in the hours worked, a covered spouse’s divorce or legal separation from the employee, or a covered dependent’s change in status. During this time, they will stay on your group health plan bill and remit monthly premiums to you, the employer. Below is a link to the letter that you as the employer are required to send to the employee within 14 days of the date of coverage termination.
Who qualifies for COBRA? Anyone, including spouses and dependents, who had coverage under the employer’s health care plan and was covered the day before the event that caused the loss of coverage needs to be offered COBRA. COBRA coverage does not have to be offered to an employee who was not yet eligible to participate in the group health plan, an employee who declined participation in the group health plan, or an employee who is enrolled for Medicare benefits.
Which benefits are covered? Any plan that an employer establishes or maintains which provides medical care, such as:
- Health care plans
- Medical spending accounts
- Dental and vision plans
- Prescription and drug plans
- Alcohol and substance abuse plans
- Mental health plans
COBRA Qualifying Event Notice: The plan is not required to act until notice of a qualifying event is provided. The type of qualifying event will determine who sends the notice. Employers must notify the plan if the qualifying event is one of the following:
- Termination or reduction in hours
- Death of covered employee
- A covered employee is entitled to Medicare
- Employer bankruptcy.
COBRA Election Notice: When the plan receives notice of a qualifying event, qualified beneficiaries must be given an election notice within 14 days. This describes their rights and how they can elect to continue coverage. A link to the Model COBRA notification letter can be found below. This should be sent to your former employee along with the carrier application. We strongly advise that you terminate the employee from the group health plan while they are deciding to elect COBRA coverage. If the employee elects to continue coverage they will be reinstated back to their termination date with no lapse in coverage. If electing COBRA they will need to complete a new enrollment form and send to our office for processing.
For employers with less than 20 employees, States such as New Jersey and Pennsylvania have enacted coverage continuation plans often referred to as “Mini COBRA.” NJ Continuation is very similar to the federal law, however the timeframe for election of coverage is shortened. Qualified beneficiaries must make an election for continuation no later than 30 days after the qualifying event. Additionally, only group medical benefits are eligible for continuation. In Pennsylvania the same rules apply except one can only continue coverage for 9 months as opposed to 18 or 36 months like Federal COBRA and NJ Continuation.
Much like COBRA, once the employer is made aware of the qualifying event, the employer must send the appropriate continuation letter below along with the carrier application. Again, we strongly advise that you terminate the employee from the group health plan while they are deciding to elect “Mini COBRA” coverage. If the employee elects to continue coverage they will be reinstated back to their termination date with no lapse in coverage. If electing “Mini COBRA” they will also need to complete a new enrollment form and send to our office for processing.
If you or your employees have any questions, please do not hesitate to Contact Us at any time