COBRA Continuation Coverage: What It Means for Your Business and Your Employees
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), many employees and their families may be able to continue the coverage they lost from work due to a serious life event for a limited time at their own expense. Depending on the qualifying event, COBRA continuation coverage extends from the date of the qualifying event for a period of 18 or 36 months.
Employers may request the full cost of coverage, plus a 2% administrative charge to be paid from individuals who elect continuation coverage. Working with a Professional Employer Organization (PEO) such as Professional Employer Resources Inc. (PER) can help ensure a better understanding of COBRA and how it can benefit your business and your employees.
What is COBRA?
COBRA continuation coverage may be offered if group health coverage is lost due to:
- A covered employees death
- Termination or reduction in the hours of a covered employee’s becoming entitled to Medicare
- A child’s loss of dependent status
Under COBRA, group health plan is any arrangement that an employer establishes or maintains to provide employees or their families with medical care, whether provided through:
- A health maintenance organization
- Out of the employer’s assets on a pay-as-you-go basis
What requirements must be met to receive continuation coverage under COBRA?
Three basic requirements must be met to receive COBRA continuation coverage:
- COBRA must cover your group health plan
- A qualifying event must occur, and
- You must be a qualified beneficiary for that event
What events would qualify an employee to receive COBRA?
Qualifying events for a covered employee which can cause him or her to lose their group health coverage include:
- Termination of the employee’s employment for any other reason than “gross misconduct”
- Reduction in the number of hours of employment
Let PER Assist Your Business with Your COBRA needs
At Professional Employer Resources Inc. (PER), we have years of experience providing human resources administration services to companies like yours. In most cases, we can help provide the COBRA general notice and the qualifying event notice to your employees. We can also accept COBRA payments and administer the benefits in compliance with state and federal laws. Contact us today on the web or by phone at 1-888-599-4991 to learn about all of the benefits administration services we can assist you with to help make your HR department’s life easier.