You are here:

Archive for the ‘COBRA News’ Category

COBRA Termination

Posted on: August 6th, 2012 by Kristen Marie

Many people want to know what events can trigger COBRA insurance termination, or in other words, can end your coverage with coverage.  There are many events that can trigger COBRA coming to an end, but these are the most common.

  • Failure to Pay Premiums:  Unfortunately the most common reason that COBRA is terminated is when someone fails to pay their premiums.  Under the law, your coverage can be terminated if a premium payment isn’t received on time.  If you find yourself in a situation where you can not pay, it is extremely important to reach out to the company beforehand and try to work something out.  Otherwise you may find yourself without COBRA coverage.
  • Group Health Insurance Plan Ends:  If for any reason the group health insurance plan ends at your former place of business, then COBRA also ends.  The group plan must be active for you to use it with COBRA.  That means that if your previous company stops offering a health plan, you also lose coverage.
  • Company Goes Out of Business:  When a company goes out of business, the health insurance plan is no longer active and that means it can not be continued with COBRA.  The coverage will be terminated and you will need to seek out alternate insurance.
  • COBRA Period Ends:  At the end of the COBRA term, normally 18 months, the coverage will be terminated.  In most circumstances unless there is another triggering event, you can not extend coverage beyond the time period.
  • Qualification for Medicare: When you qualify for Medicare you are no longer eligible for COBRA in most circumstances.  You will need to change coverage to Medicare instead of COBRA.  However family members can stay on COBRA and in fact may even be able to extend coverage due to the second qualifying event.
  • Qualification for New Insurance Plan:  If you get a new job and become eligible for a new plan, you can no longer use your COBRA coverage.  However you can continue to use COBRA if there is a waiting period to sign up for the new plan.

What Are My Options if COBRA Insurance is Terminated?

The main option you will have if COBRA is terminated and you are not employed is to seek out a private health insurance plan or a government health insurance plan.  Private plans are the most common.  You can learn more about other options here or by getting a free health insurance quote.

COBRA Non Compliance – Employers

Posted on: August 6th, 2012 by Kristen Marie

The IRS just came out with a report siting that over 90% of companies are non-compliant in terms of their COBRA insurance administration, and therefore are opening themselves up to the danger of serious fines, auditing, court cases, and penalties.  The main reason that so many companies are believed to be non-compliant is that companies believe their health insurance provider is handling their COBRA administration and they believe the health insurance company is the liable party.  However, even if the health insurance company handles COBRA, at the end of the day the employer is 100% liable for COBRA and it being administered according to the law.

In addition, COBRA non compliance can have serious consequences for employers.  These include

  • Losing expensive court cases:  Over 75% of companies lose COBRA court cases and end up liable, responsible, and in most cases owing major damages.
  • Expensive Fines:  $100 IRS penalty per beneficiary per day (up to $200) plus a $110 ERISA penalty per beneficiary per day fine for non compliance.  That means the company will be fined over $100,000 for just six months of non compliance for 1 family of four.  Imagine if there were more than one and how quickly these fines can add up.  They are enough to bankrupt companies in times of major layoffs.

So what do you need to be in compliance for COBRA insurance?  Here are some of the most important documents and evidence you need, but the list is not exhaustive.

  •  Evidence that every person on the group health insurance plan received an initial notice about COBRA when they enrolled
  • COBRA insurance handbook
  • Standard COBRA form letters for employers and family members
  • Copies and records of COBRA notices
  • Copies and records of any COBRA events

Instant Quote Online

Did you know? You can save up to 65% by comparing Insurance alternatives.

* Free quote. No obligation. Learn More

Find COBRA Insurance information in your state.