What is COBRA?
Before delving into whether or not your former employee is entitled to cobra coverage or not, lets first lay down the foundation of what Cobra is and how it works. COBRA is an acronym, short for the Consolidated Omnibus Budget Reconciliation Act and was designed to protect former employees from a lapse of insurance coverage. If an employee is capable of receiving COBRA benefits, he, along with any family members, will continue to receive Insurance through their former employer’s health insurance plan. Although coverage will now cost higher, due to the fact that they will be paying the entire premium rather than a portion, the cost is generally still less than if they had to purchase an individual plan rather than one at a group rate.
Does Every Former Employee Receive Cobra Coverage?
As a business owner, it’s important to understand the laws regarding Cobra Coverage. Not everyone who loses their job is entitled to cobra. Only employers who have 20 or more employees and a group health care program must offer it. As a general rule the employee may receive benefits even if he chooses to leave the company on his own. Only if the employee has committed gross misconduct may he fail to receive benefits. The duration of time through which the former employee may receive benefits is anywhere from 18-36 months. Lastly, if the employee was not a participant of the group coverage plan before quitting or getting fired, he will not be eligible.
Violations of Cobra Coverage Laws
The most common violation to cobra law is failure to notify your former employee about his or her right to Cobra Coverage. Notice is required before you terminate an employee. Usually this notice of rights is explained within 90 days of the coverage occurring and if changes occur in the plan, the employee would also need to be contacted. Additionally, within 30 days of terminating your employees, it’s your responsibility to explain Cobra rights to them. If the employee has a spouse or ex-spouse, they too need to be notified. This must occur within 14 days of the termination notification.
Whether you have just let someone go, or an employee has given his notice, it is your duty as a business owner to follow the proper laws and procedures. If you have any further questions regarding Cobra Coverage contact one of our insurance professionals and they will be happy to speak with you.