COBRA

COBRA is a federal law appearing in three places: the Employee Retirement Income Security Act (ERISA); the Internal Revenue Code (Code); and the Public Health Service Act (PHSA).

These laws allow qualifying employees who lose their health benefits through termination or a “qualifying event” to continue with the group health plan for a limited time. Coverage can be cancelled anytime by emailing the request to cobra@rmrbenefits.com. This request can be submitted at any time of year but must be submitted by the end of the month for the following month as coverage cannot end part way through a month.

What Plans Are Subject to COBRA?

Group Health Plans: COBRA applies to nearly all plans that provide medical care and are maintained by the employer. The term “medical care” has a broad definition in the law. It includes medical, dental, vision, and drug treatment coverage.

Plans Subject To COBRA:

  • plans for which an HMO provides the medical services;

  • group insurance plans in which employees pay the premiums;

  • treatment programs and clinics maintained by employers;

  • self-insured medical reimbursement plans;

  • employee assistance programs;

  • health flexible spending accounts;

  • health reimbursement arrangements (HRAs);

  • discount programs; and

  • wellness programs.

 

Example: Health and Life Insurance. An employer covers all employees under a medical plan and group term life insurance. When an employee quits, he or she may elect to continue coverage under the medical plan. The employee has no right under COBRA to continue group term life insurance because it is not medical care. (Note, however, that some state laws give employees the right to continue group term life insurance).

Important features of the plan

Certain plans that provide for long-term care services are not considered group health plans and are not subject to COBRA – even when they provide for benefits that include medical care.

Some Voluntary Plans Are Subject to COBRA. Some employers offer their employees voluntary employee-pay-all medical insurance programs, in which the employers have minimal involvement (such as allowing the insurer to contact employees during working hours, collecting employee premiums and remitting them to the insurer, and similar activities). These arrangements can be subject to COBRA, and employers should get advice before encouraging or allowing them; otherwise, employers can be left with COBRA obligations and no corresponding insurance coverage.

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