Q: “I’m only liable to offer COBRA to those employees who quit or are fired, right?”
This is a common question in the world of COBRA administration. And it’s commonly misunderstood. There are actually two types of events that qualify for COBRA and each event type is associated with varying amounts of coverage eligibility.
- Type 1 – 18 Months of Coverage | Employee Event
In these scenarios, COBRA is offered because an employee’s insurance coverage ends due to a change in their employment status (termination, reduction in hours, etc.). This coverage is offered to each member enrolled in coverage the day before the COBRA event occurred and can include the employee, their spouse and any applicable dependents. This COBRA event type allows participants to maintain COBRA for 18 months.
- Type 2 – 36 Months of Coverage | Dependent Event
In these scenarios, the coverage loss ONLY affects the spouse or dependents. Most of the time the employee is still actively at work and their insurance coverage is still in place. This type of COBRA event is trigged by divorce, a child aging off the plan, death of employee and in some instances Medicare entitlement. Coverage is offered only to the spouse or children losing access to coverage and allows participants to maintain COBRA for 36 months.
Dependent events are often overlooked and open employers up to unending COBRA litigation liability. The COBRA General Rights Notice (AKA Initial Rights Notice, New Hire Notice, etc.) can shift the responsibility of notification to your employees and their dependents, if this notice is provided promptly, via proof of mail and to all covered participants. Many employers think they’ve provided the notice correctly, but many times, they inadvertently skipped a step in the compliance process and leave themselves wide open to unwanted COBRA litigation liability.
Let’s face it, COBRA is complicated and “oops” situations happen. But don’t let it happen to you! Work with an administrator that specializes in COBRA to ensure you remain in compliance with all the nuances of COBRA law.