Human Resources COBRA & Coordination with Other Federal Law Benefits PRESENTED BY DONNA GABEL Human Resources Manager Alexander City Housing Authority

Disclaimer This presentation, related documents, contents, and comments are for informational purposes only and should not be construed as official interpretation of any laws, regulations, requirements, or compliance; or legal advice or legal opinion. You are urged to consult related government agencies or your attorney concerning your own situation and any specific legal questions you have may have. Donna Gabel is a Human Resources Manager with the Alexander City Housing Authority.

PURPOSE Gives workers and their families who lose their health benefits the right to choose to continue group health benefits for limited periods of time under certain circumstances, such as: Voluntary or involuntary job loss Reduction in hours worked Transition between jobs Death Divorce Other life events COBRA Consolidated Omnibus Budget Reconciliation Act

Generally requires group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of identical health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end. Outlines how employees and family members may elect continuation coverage. Requires employers and plans to provide notice. Qualified individuals may be required to pay the entire premium for coverage up to 102% of the cost to the plan (includes a 2% administrative charge).

Generally applies to all group health plans that provide medical care and are maintained by: Private-sector employers w/min. 20 employees State Governments Local Governments (such as LGHIP) Plans can be through insurance, HMO, out of employer’s assets on a pay-as-you-go basis, or otherwise. Which Insurance Plans?

Inpatient and outpatient hospital care Physician care Surgery and other major medical benefits Prescription drugs Dental and vision care Life insurance, nor disability benefits are included. What is Considered Medical Care Under a Group Health Plan?

Employees Spouses Former Spouses Dependent children Who is Covered?

Death of a covered employee Termination of a covered employee’s employment for any reason other than “gross misconduct” Reduction in hours worked Divorce or legal separation from a covered employee Covered employee’s becomes entitled to Medicare Child’s loss of dependent status (& coverage) under the plan (ACA requires coverage until age 26) Qualifying Events

Summary Plan Description – must include COBRA rights COBRA General Notice – must be provided within the first 90 days of coverage (most often included in the SPD) COBRA Qualifying Event Notices to the Plan COBRA Election Notice COBRA Notice of Unavailability of Continuation Coverage COBRA Notice of Early Termination of Continuation Coverage Required Notices

Employer Employee Termination or reduction in hours Death of employee Employee entitled to Medicare Bankruptcy of private- sector employer Within 30 days of event Divorce Legal Separation Child’s loss of dependent status under the plan 60 + days notice depending on plan requirements COBRA Qualifying Event Notices To Plan (Check your plan rules)

Group health plans may sometimes deny a request for coverage or for an extension of continuation coverage and notice of denial must be provided. Within 14 days after the request is received Must explain the reason for denying the request COBRA Notice of Unavailability of Continuation Coverage

Continuation coverage must generally be available for a maximum period (18, 29, 0r 36 months). If terminated early by the plan, the plan must provide the individual this notice As soon as practical after the decision is made Date the coverage will terminate Reason for termination Any rights the individual may have to elect alternative group or individual coverage COBRA Notice of Early Termination of Continuation Coverage

Depends on qualifying event: 18 months – employment termination or reduction in hours 36 months – after the date employee became entitled to Medicare less the # months under Medicare 36 months – for all other qualifying events A plan may provide longer periods beyond the maximum required by law Duration

Duration Cont’d. If entitled to an 18-month maximum period of coverage, may be eligible for an 18-month extension under 2 circumstances:  Qualified beneficiary is disabled  A second qualifying event occurs

Duration Cont’d. If a qualified beneficiary is disabled and meets certain requirements, all of the qualified beneficiaries receiving COBRA due to a single qualifying event are entitled to an 11-month extension for a total of 29 months  SSA determines the disability before the 60 th day of continuation coverage, and  Disability continues during the rest of the 18-month period Plan can charge increased premium up to 150% of the cost of coverage during the 11-month extension

Duration Cont’d. Second Qualifying Event – only if it would have caused the beneficiary to lose coverage under the plan in the absence of the first qualifying event.  Death of a covered employee  Divorce or legal separation of a covered employee and spouse  Covered employee becoming entitled to Medicare coverage  Loss of dependent child status under the plan

Premiums not paid in full on a timely basis Employer ceases to maintain any group health plan Qualified beneficiary begins coverage under another group health plan after electing COBRA Qualified beneficiary becomes entitled to Medicare benefits after electing COBRA, or Qualified beneficiary engages in conduct that would justify the plan in terminating coverage, such as fraud Termination of Coverage

Employee/beneficiary responsible for 100% of eligible costs Plan sets premium due dates after initial payment Must be allowed to pay premiums on a monthly basis Some plans allow more other payment intervals (weekly or quarterly) 30 day grace period is required for payment, however plan has the option to cancel coverage until payment is received, retroactively reinstating coverage Paying for Continuation Coverage

Payment of Coverage Cont’d. Plan is not obligated to send monthly premium notices Plan may cancel coverage for non-payment Employers may chose to subsidize or pay the entire cost for COBRA for terminating employees and their families as part of a severance agreement.

FMLA  Group health coverage under FMLA is not COBRA  FMLA leave is not a qualifying event under COBRA  COBRA event may occur if employee on FMLA doesn’t return to work and notifies the employer ACA  Extends dependent child coverage to age 26  Prohibits limits/exclusions for preexisting conditions  Bans lifetime or annual $ limits for essential health benefits  Requires plans/insurers provide understandable plan summary Coordination with Other Federal Benefit Laws

Donna Gabel Human Resources Manager Alexander City Housing Authority 2110 County Road Alexander City, AL (256) ext. 205 (256) Fax Contact Information