Issue 12

Whether you are new to COBRA administration or a seasoned professional, a review of the basics can be beneficial. In this newsletter we’ll review the standard requirements of COBRA, including what actions need to be taken, when, and by whom.

COBRA Basics

Q: What is COBRA?

A: Consolidated Omnibus Budget Reconciliation Act (COBRA) Passed by Congress in April 1986, COBRA is a law that requires employers with 20 or more employees to provide temporary continuation of coverage in certain situations when coverage would otherwise be terminated.

Q: Who is entitled to COBRA continuation coverage?

A: There are three basic requirements that must be met for an individual to be entitled to elect COBRA continuation coverage:

1. The individual's group health plan must be subject to COBRA
2. A qualifying event must occur.
3. The individual must be a qualified beneficiary for that event.

Q: What is a qualifying event?

A: Qualifying events cause an individual to lose his or her group health coverage. The type of qualifying event determines who the qualified beneficiaries are and the length of time that COBRA must be offered for.

*In certain circumstances qualified beneficiaries entitled to 18 months of continuation coverage may become entitled to a disability extension of an additional 11 months (for a total maximum of 29 months) or an extension of an additional 18 months due to the occurrence of a second qualifying event (for a total maximum of 36 months).

Q: What is a qualified beneficiary?

A: A qualified beneficiary is an individual who was covered by a group health plan on the day before a qualifying event occurred that caused him or her to lose coverage. Only certain individuals can become qualified beneficiaries due to a qualifying event, and the type of qualifying event determines who can become a qualified beneficiary when it happens.

Required notifications—who is responsible for what and when?

1. COBRA general notice

COBRA requires employers to provide each covered employee and each spouse who becomes covered under the group plan a general notice describing COBRA rights. This general description addresses the continuation of coverage COBRA and the steps necessary for notifying the plan administrator of a qualifying event. The general notice must be provided within the first 90 days of coverage. If we are contracted to provide this service for you, we recommend that you submit the required information for processing within the first 60 days of coverage to ensure adherence to the COBRA-regulated timeline. Please see “How to notify UPMC BMS of COBRA events” section for options on how to report this information on COBRA events to UPMC BMS (Benefit Management Services).

2. COBRA qualifying event notifications—employer responsibility

Before continuation coverage can be offered, a qualifying event must occur, and notification of the event must be provided within the COBRA-regulated time frame.

If UPMC BMS is your COBRA administrator, you (as the employer) must provide us with notification of a qualifying event within 30 days of the event.

These events include the following:

1. Termination or reduction in hours of employment of the covered employee
2. Death of the covered employee
3. A covered employee becoming entitled to Medicare
4. Bankruptcy of a private sector employer
5. Military leave
6. Divorce/Legal separation*
7. A child’s loss of dependent status under the plan*

Please see “How to notify UPMC BMS of COBRA events” section for options on how to report this information to UPMC BMS.

Failure to provide notification of these events to your acting COBRA administrator within 30 days of the event will result in noncompliance with COBRA regulations.

*For qualifying events of divorce/legal separation and loss of dependent child status, it is the employee’s responsibility to provide notice to the employer of the event within 60 days, counted from the later of the date on which the qualifying event occurs or the date in which the employee loses coverage under the plan as a result of the qualifying event.

3. COBRA election notice—UPMC BMS responsibility

Once we receive the employer's notice of a qualifying event, we are then responsible for providing the qualified beneficiaries with notice of their right to elect COBRA coverage. This letter explains COBRA, indicates the plan(s) being offered, the associated monthly premium(s), and the election/enrollment procedures, which include the date by which the election must be made. COBRA provides each qualified beneficiary with 60 days to make this election. We are required to provide this notice to the qualified beneficiaries within 14 days after receiving your notice of a qualifying event.

4. COBRA notice of unavailability of continuation coverage—employer responsibility

On occasion, the employer may have the right to deny a request for continuation coverage. For example, if a spouse contacts you 90 days after their divorce from the covered employee with a request to continue coverage, you have the right to deny this request because the spouse did not meet the 60-day deadline established by COBRA regulations for providing notification. In such a case, the Department of Labor requires the plan administrator to provide a notice stating that the request for continuation coverage was denied and the reason for the denial. This notice must be provided within 14 days after the request is received by the employer.

How to notify UPMC BMS of COBRA events

As outlined above, for the appropriate COBRA notices to be issued, there are two types of events that the employer must notify UPMC BMS of:

1. COBRA general notice event (newly enrolled member)
2. COBRA qualifying event

We offer the following options for communicating the required information to our team: