Employee Group Health Plans and Coverage After Termination

Insurance companies are typically regulated by the Department of Insurance in each state. As such, insurance lawyers represent people who have had a legitimate insurance claim denied, or who have been subjected to a company’s act of bad faith. Insurance law largely addresses insurance fraud, however it may also address instances where an individual is refused coverage that is their legal right.

There are numerous different types of insurance. While some insurance coverage is required by law, such as car insurance, others insurances are optional. Health Insurance is one such type of insurance coverage that is optional. It Is important to note that some states do however require an individual to carry health insurance, in order to prevent tax penalties.

Health insurance plans are types of insurance coverage which provide coverage to the insured policyholders. The plans thus pay certain medical and surgical expenses that are covered by the plan. Health insurance plans are often necessary because, if an individual does not have a plan, the out-of-pocket expenses related to medical emergencies can be substantial.

Health insurance plans are able to prevent policyholders from paying portions of the costs associated with medical emergencies and medical treatment. Health insurance plans can cover an individual’s vision, dental, prescription medications and other medical treatments.

There are typically three different ways of obtaining a health insurance plan:

1. The individual acquires the plan through a private or government sponsored health insurance marketplace;
2. The individual is covered by their state’s Medicaid or Medicare program(s); or
3. The individual is provided a health insurance plan by their employer as a benefit to working at that company.

What Is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (“COBRA”) is a federal program that makes sure employees covered under The Employment Retirement Income Security Act (“ERISA”) are not deprived of group health coverage after their original coverage is terminated. Importantly, COBRA requires employers and plans to provide notice about how COBRA coverage works.

Thus, COBRA allows workers and their families who lose their health insurance coverage the right to continue such health insurance coverage for a limited period of time after the original coverage is terminated. COBRA coverage most often occurs when an individual is terminated from a place of employment that provided health insurance coverage as a benefit to working with the company.

However, COBRA can also cover other instances in which an individual may lost their original coverage such as:

• Voluntary job loss;
• Reduction in the hours worked for the company, essentially dropping the employee to part time;
• The transition between jobs;
• Death of the employee that was the primary insurance holder; and/or
• Divorce.

It is important to note that COBRA coverage is not free. In fact, persons qualified for COBRA coverage may be asked to pay the entire premium for the original coverage. It is also important to note that failure to pay the premiums due for the plan may result in COBRA coverage being terminated. If the beneficiary to the plan becomes entitled to state benefits that cover that individual, COBRA coverage may also be terminated. Finally, if the individual’s previous employer ceases to offer a group health insurance, coverage may also be terminated.

Do I Have a Right to Continue My Health Care Coverage When My Job Ends?

As mentioned above, if you are qualified for COBRA, your former employer must notify the administrator of the company’s group health care plan that your job has ended within 30 days from the date of your job status change. Next, the administrator is required to notify you of your right to continue coverage within 14 days from the date that the former employer provided them notice of your job status change.

Finally, your continued coverage would extend for a maximum period of 18 months after the period from which you were notified of your rights under COBRA. However, there are scenarios in which a person’s coverage could extend under COBRA for a period of 36 months, such as the death of the employee that was receiving the benefit or divorce/separation.

It is important to note that the individual that lost coverage has an election period of 60 days from either the date they lost the original coverage, or the date they received notification of the COBRA election, whichever occurs later in time. Further, every person covered under the group health benefits must make their own election to sign up for COBRA coverage.

How Much Does COBRA Coverage Cost?

As mentioned above, COBRA coverage is not free. In fact, COBRA coverage is quite often expensive, especially for a person that was just terminated from their job. Coverage under COBRA can cost up to the full cost of the insurance plan, without the employer paying any portion of the plan, plus an additional 2% administrative cost.

This means an individual choosing to continue their coverage under COBRA may be on the hook for 102% of the original cost of the employee group health plan. Most often individuals are shocked by the amount that their former employer contributed towards the health insurance premium.

What Information Must Be Included in the Notice?

It is important to note that there is no specific rule regarding how an employer must notify a former employee regarding their option to continue coverage of their terminated health insurance benefits. However, the employer must generally make a good faith effort to notify the former employee. Traditionally accepted methods of notification include verbally notifying the employee, or sending them written notice in the mail to their last known address.

The notice provided must them contain the following information:

• The premium amount owed, and the due dates that such premium payments need to be made;
• The right of the employee and their beneficiaries to elect continued coverage; and
• When the election period is to begin.

What Are Some Alternatives to COBRA?

As can be seen, continuing health insurance coverage through COBRA is often expensive. As such, it may be in the former employee’s best interest to look into other methods of obtaining health insurance. Other common options to obtaining health insurance after one’s original health insurance coverage ends include:

• Purchasing private health insurance, either directly from a provider or from the marketplace at healthcare.gov;
• Checking the laws of their state to see if either they or their beneficiaries are eligible for Medicaid;
• Pay for all medical related expenses and medical emergencies out-of-pocket;
• Obtain coverage through a new employer; or
• Obtain coverage through their spouse’s employer, as the qualifying event for COBRA will entitle the individual that lost their coverage to a special enrollment period for other group health plans.

If My Rights Under COBRA Have Been Violated, What Should I Do?

If you believe that your employer has violated your rights, such as by failing to notify you of our rights under COBRA, then you should immediately consult a workers compensation lawyer in your area. An experienced workers compensation that specializes in health insurance coverage will be able to advise you of your legal rights as an employee covered under COBRA.

An attorney will also be able to advise you as to what kind of benefits you are entitled to moving forward. Finally, an experienced attorney will also be able to represent you in court, if court intervention becomes necessary to resolve the COBRA coverage.