*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***

Chapter 15 - Third Party Liability (TPL)

Effective:  June 1, 2011

15.25 - COBRA

Archived:  June 1, 2016 (Previous Versions)

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that gives workers and their families who lose their health care benefits the right to choose to continue group health benefits for a limited time under certain circumstances.  

This section provides a broad overview of COBRA.

Note:  Minnesota state law also provides rights to continuation of coverage. State law may differ from the federal law. See the Minnesota Department of Health Web site for specific information.

Eligibility for COBRA Coverage.

Length of COBRA Coverage.

Cost of COBRA Coverage.

COBRA and Minnesota Health Care Programs (MHCP).

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Eligibility for COBRA Coverage

COBRA requires that group health coverage sponsored by employers with 20 or more employees offer employees and their families the opportunity to temporarily extend health care coverage in certain instances where coverage would otherwise end.

People eligible for COBRA coverage are called "qualified beneficiaries.” A qualified beneficiary is:

l  An employee, including a retiree (there are special rules for retirees),

l  A spouse, including a former spouse,

l  A dependent child.

A "qualifying event” is an event that would cause an individual to lose their group health care coverage. The type of qualifying event will determine who the qualified beneficiaries are and how long the COBRA coverage will last.

l  Qualifying events for employees:

n  Voluntary or involuntary termination of employment for reasons other than gross misconduct.

n  Reduction in the number of hours of employment.

l  Qualifying events for the spouse of an employee:

n  Voluntary or involuntary termination of the covered employee’s employment for reasons other than gross misconduct.

n  Reduction in the hours worked by the covered employee.

n  Covered employee becoming eligible for Medicare.

n  Divorce or legal separation from the covered employee.

n  Death of the covered employee.

l  Qualifying events for the dependent children of the employee:

n  Voluntary or involuntary termination of the covered employee’s employment for reasons other than gross misconduct.

n  Reduction in the hours worked by the covered employee.

n  Covered employee’s becoming entitled to Medicare.

n  Divorce or legal separation of the covered employee.

n  Death of the covered employee.

n  Loss of dependent child status under the plan rules.

This chart summarizes the qualifying events for an employee and his or her spouse and dependent children:

Qualifying Events

COBRA Eligible Individuals

Employee

Spouse

Dependent Children

Voluntary or involuntary termination of the covered employee’s employment for reasons other than gross misconduct.

x

x

x

Reduction in the hours worked by the covered employee.

x

x

x

Covered employee becomes entitled to Medicare.

 

x

x

Divorce or legal separation of the covered employee.

 

x

x

Death of the covered employee.

 

x

x

Loss of dependent child status under the plan rules.

 

 

x

Each of the qualified beneficiaries for a qualifying event may independently choose to continue their coverage.

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Length of COBRA Coverage

COBRA coverage is available to qualified beneficiaries for 18 months when the qualifying event is:

l  Voluntary or involuntary termination of the covered employee’s employment for reasons other than gross misconduct.

l  Reduction in the hours worked by the covered employee.

Exception:  Certain disabled qualified beneficiaries who lose coverage due to termination of employment or a reduction of hours may qualify for extension of coverage. Disabled qualified beneficiaries who meet certain requirements, and their family members, qualify for an additional 11 months of coverage. The Social Security Administration (SSA) determines if the employee meets this exception.

For most other qualifying events, qualified beneficiaries are entitled to up to 36 months of COBRA coverage.   

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Cost of COBRA Coverage

Qualified beneficiaries are usually responsible for the full cost of the coverage plus up to two percent for administrative costs. Some employers may subsidize COBRA coverage, although they are not required to do so.

Exception:  For qualified beneficiaries receiving the 11 month disability extension of coverage, the premium for those additional months may be increased to 150 percent of the plan's total cost of coverage.

COBRA and MHCP

Review the COBRA coverage to determine if the other health care coverage is a barrier for MinnesotaCare or if it should be reviewed for being cost effective for MA.

l  COBRA coverage is not considered Employer-Subsidized Insurance (ESI).

l  Current COBRA coverage could subject the client to the MinnesotaCare current health care coverage barrier.

l  Previous COBRA coverage could subject the client to the MinnesotaCare four-month insurance rule.

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