Most Frequently Asked COBRA Questions
Q: Which employers must comply with COBRA?
A: COBRA applies to employers that offer their employees health coverage and have employed 20 or more employees for 50 percent of its business days during the preceding calendar year. Exceptions are federal government and church plans as defined by Internal Revenue Code Section 414(3). For more information on compliance and small employer exemption please, contact CobraOne.
Q: What is the minimum waiting period before a covered employee is eligible for COBRA coverage?
A: The employee must be enrolled in the group health plan on the day before the qualifying event takes place. Other than that there is no minimum waiting period that exists under COBRA.
Q: If a student lost dependent status when he stopped attending school, then elected COBRA coverage, went back to school and was reenrolled in the plan as an active dependent child, do we have to offer him COBRA coverage a second time if he stops attending school again?
A: Yes. COBRA does not set a limit on the number of times an individual can become a qualified beneficiary.
Q: Can we cancel the health coverage of a covered employee the day before he or she is terminated?
A: The Internal Revenue Services’ (IRS) COBRA regulations state that a reduction or termination of health coverage in anticipation of a qualifying event will be disregarded in determining whether a qualifying event has occurred. An employer can not deliberately negate its COBRA responsibility by terminating an employee's health coverage a few days before a qualifying event. Additionally, if a covered employee drops coverage in anticipation of a divorce, once the divorce becomes final, the employer should offer the employee’s ex-spouse COBRA coverage at least from the date the spouse would have lost coverage due to the divorce.
Q: Does a spouse or dependent not covered by the group health plan have any rights under COBRA when a qualifying event occurs?
A: No, if the spouse or dependent was not enrolled in the plan on the day before the qualifying event or didn't lose coverage in anticipation of an event, the employer is not obligated to offer COBRA to the spouse or dependents. However, the former employee could cover the spouse or dependents under the COBRA coverage at a later date during an open enrollment period.
Q: If an employee notified his/her employer of a qualifying event for a family member six months after the qualifying event, is the employer still required to provide COBRA coverage?
A: The Department of Labor’s (DOL) COBRA notice regulations require that qualified beneficiaries notify plan administrators within 60 days of a dependent’s qualifying event or the date that the qualified beneficiary is informed of the obligation to provide the notice and the plan's procedures (if any) for providing such notice, whichever is later. Although notification occurred well after 60 days from the qualifying event, the final outcome would depend on several circumstances, such as when the employer establishes the loss of coverage date and whether the plan documents and general COBRA notice explained the 60-day requirement. The situation should be carefully analyzed before a final determination is made not to provide COBRA coverage. Note: CobraOne will provide the required notice of unavailability in this event.
Q: Can we terminate our group health plan and also terminate coverage for qualified beneficiaries who are receiving COBRA coverage under our plan?
A: Yes, employers may terminate coverage for qualified beneficiaries who are covered by the plan that is terminating. However, if active employees are covered under another group health plan or permitted to switch coverage to other plans offered by the employer, then qualified beneficiaries who were covered under the terminated plan must be allowed those same rights.
Q: Are cafeteria plans covered under COBRA?
A: The cafeteria plans and flexible spending accounts (FSAs) that provide medical care are covered under COBRA's requirements. Employers must permit qualified beneficiaries who were covered under such plans to continue to participate in the medical plans. IRS' COBRA regulations provide that COBRA coverage under health FSAs may only be offered to a limited extent, if at all. Employers are not required to allow qualified beneficiaries to continue participating in dependent care or other non medical programs (or plans). For more details on cafeteria plans, please contact or submit question to CobraOne.
Q: Are employers required to offer qualified beneficiaries the same choice of plans as active employees during open enrollment period?
A: Yes, the regulations give qualified beneficiaries the same rights as active employees to change coverage and add or drop family members during open enrollment periods. If requested, CobraOne will contact your COBRA participants during open enrollment.
Q: If a qualified beneficiary who has elected COBRA becomes disabled, do we have to extend his coverage beyond 18 months?
A: The rules for the disability extension are as follows: Qualified beneficiaries must apply for the disability extension within 60 days of the date of a determination of disability by the SSA and before the end of the regular 18-month COBRA period. For this 60-day rule to be imposed, employers must notify qualified beneficiaries that the rule exists. Generally, employers may charge 150 percent of the applicable premium during the 11 months of extended COBRA coverage, which may be terminated if the individual recovers from the disability. However, the IRS final COBRA regulations limit the extent to which the 150-percent premium may be imposed on non-disabled family members.
Q: How long should employers keep COBRA-related records?
A: Employers should be prepared to keep records for a minimum of six years.
Q: If we have committed COBRA violations, what penalties could we be subject to?
A: Penalties for COBRA violations are found under the Internal Revenue Code, ERISA, or, in the case of state and local governments, the Public Health Service Act. Currently, ERISA is most often used to bring action for COBRA violations. ERISA penalties can include monetary penalties (up to $110 per day per violation), IRS penalties (up to $200 per day if there is more than one Qualified Beneficiary in the family). Additionally, the DOL can bring a lawsuit against an employer and a Qualified Beneficiary can sue an employer for failure to comply with COBRA. A judge in a lawsuit can levy ERISA fines, make the employer pay claims and attorney fees, and impose damage awards against the employer. CobraOne offers what we believe is the most comprehensive employer protection in the industry.