COBRA: What, Who, And When
All employers with at
least 20 employees would be well-served to acquaint themselves with COBRA, which gets its
name from the Consolidated Omnibus Budget Reconciliation Act enacted by Congress in 1985.
Under COBRA, employers must give
"qualified beneficiaries," who would otherwise lose health insurance coverage
due to a "qualifying event," the option to elect, within a specified amount of
time, to continue coverage under the employer’s group health plan (see chart for
definitions of "qualified beneficiary" and "qualifying event").
A qualified beneficiary must
notify the plan administrator within 60 days of the occurrence of a qualifying event. The
plan administrator must inform the qualified beneficiary of his right to purchase
continuation coverage within 14 days after the administrator is informed of the qualifying
event.
After he receives notification
from the administrator, the beneficiary has 60 days to elect coverage continuation. The
beneficiary then has 45 days from the day he elects coverage to pay the initial premium.
The coverage must be identical to that in the group health plan provided to the qualified
beneficiary at the time of the qualifying event. Group health plans covered by COBRA
usually include insurance coverage for medical, dental, vision, and prescription drug
expenses.
An employer does not have to
offer continuation coverage to an employee who is terminated for "gross
misconduct," although neither COBRA regulations nor the law itself defines that term.
General legal usage, however, indicates that gross misconduct involves a large degree of
fault (such as a criminal act) on the part of the terminated employee.
COBRA places specific and
complicated responsibilities on employers, and the penalties for noncompliance are severe
and expensive. Space does not allow a comprehensive presentation of COBRA, thus you would
be wise to consult with an attorney or benefits consultant for the specific requirements
that apply to you as an employer.
Kathleen "Kelly" Bergeron is executive vice president and chief of staff of
Associated Industries of Florida and affiliated companies (e-mail: kbergeron @aif.com).
Septernber/October 1999 -- Florida Business Insight, PO Box
784, Tallahassee, Fla. 32302, (850)224-7173, insight@aif.com
