How Long Does COBRA Last?
COBRA continuation coverage allows an employee to stay on their employer’s group health plan after leaving their job.
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA) , continuation of health coverage starts from the date the covered employee’s health insurance ends and, depending on the type of qualifying event, may last for 18 months, 29 months or 36 months. Let’s examine these time frames.
Duration for Covered Employees
Employees are eligible for 18 months of continued coverage under COBRA if the qualifying event stems from reduction of hours or termination of employment for reasons other than gross misconduct. Note that termination can be voluntary or involuntary, including retirement.
Employees who develop a disability, as determined by the Social Security Administration, within the first 60 days of receiving COBRA coverage are eligible for an additional 11 months of coverage, which equals a maximum coverage period of 29 months. To obtain this extension, the employee must inform the plan administrator of his or her disability within 60 days of receiving the disability determination and before the 18-month period expires.
Duration for Other Qualified Beneficiaries
The above durations for employees also apply to other qualified beneficiaries — specifically, spouses and dependent children. Moreover, these other qualified beneficiaries may be entitled to a maximum of 36 months of coverage if a second qualifying event occurs during the initial 18 months of coverage.
The second qualifying event cannot arise from termination of employment or reduction of hours. Instead, it must be due to the death of the covered employee, divorce or legal separation between the employee and his or her spouse, loss of dependent-child status under the plan rules or the covered employee qualifying for Medicare. Note that if a disabled beneficiary is receiving COBRA coverage for any of these reasons, the maximum coverage period is still 36 months.
Special Considerations
Early Termination
You can terminate a participant’s COBRA coverage prior to the duration set by law in the following cases:
- You’ve terminated all of your group health plans.
- The participant fails to pay his or her COBRA premiums on time. You must give the participant a grace period of at least 30 days to make late payments.
- The participant gains coverage under another plan.
- The participant is no longer deemed disabled by the SSA.
- The participant became entitled to Medicare after electing COBRA coverage.
Reminders
A number of states have “mini COBRA” laws that address coverage duration. While some states adhere to the federal guidelines mentioned in this article, other states have their own coverage periods that vary from federal law.
This is just a summary of a complicated list of laws and regulations. Be sure to get professional advice when making decisions about your employees and their insurance coverage.
The American Rescue Plan Act (ARPA) Changed Everything
COBRA Subsidies in 2021
The American Rescue Plan Act (ARPA) provides up to six months of free COBRA coverage for Assistance Eligible Individuals (AEIs), a special COBRA enrollment/coverage period, and new notice obligations as described below.
The COBRA subsidy is equal to 100% of COBRA premiums for eligible coverage and is available from April 1, 2021 to September 30, 2021.
An Assistance Eligible Individual (AEI) is defined as someone who: a) lost medical coverage under a group health plan due to their/their family member’s involuntary termination of employment or a reduction of hours; and b) is already enrolled in COBRA coverage on April 1, 2021 or enrolls in COBRA coverage during the Special Enrollment Period.
The Act provides an AEI who is not enrolled in COBRA as of April 1, 2021 a second window of time to enroll in order to take advantage of the subsidy.
The employer (self-insured plans) or carrier (fully-insured plans) will be reimbursed the total COBRA premium – including administrative fees – by claiming a credit against Medicare payroll taxes.
For a full recap of the COBRA subsidy provisions in the ARPA, view BASIC’s full recap.
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