3 Things You Must know about COBRAPosted: August 12, 2011
Back in 1985, COBRA (Consolidated Omnibus Budget Reconciliation ACT) was passed and became effective in 1986. I’ve been involved with employee benefits for so long, I specifically remember when it all took place. I was the benefits person at Alta Bates Hospital in Berkeley, and it was quite overwhelming.
Today, there are many administrators that can do the job for an employer subject to COBRA. We didn’t have that back in 1986. I did it all manually. I had two drawers of a lateral file to house copies of the letters I sent out and I had them in date order so I could toss the old ones when the time-lines were up. We had about 3000 employees at that time so it was very very busy.
Even if an employer uses an administrator, the bottom line is that COBRA is an employer law and if anything goes wrong, it falls on the employer. It’s really up to you to know and understand how the law works.
Just in case you don’t know (or have tried to ignore this important employer law) if Federal COBRA or Cal-COBRA applies to you, here are the three key points.
- Plan Coverage: Group plans with 20 or more employees on more that 50 percent of its typical business days in the previous calendar year are subject to Federal COBRA. You have to count both full and part-time employees to make the determination (I know this doesn’t make any sense when you have to count part-time employees even if they aren’t eligible, but I didn’t make this law!) The part timers counts as a fraction of an employee with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must worked to be considered full-time.
- Qualified Beneficiaries: an individual covered by a group health plan on the day before a qualifying event who is either an employee, the employee’s spouse, or an employee’s dependent children. Pretty much anyone covered under the employee’s plan.
- Qualifying Events: an event that would cause an individual to lose health coverage. The type of event will determine who the qualified beneficiaries are and the amount of time a plan must offer health coverage to them under COBRA.
You can find information on the Department of Labor’s website for Federal COBRA. You can also attend a class on COBRA to make sure you’re in compliance. More often than not, the courts rule in favor of the former employee/dependent in question when it comes to COBRA, so it would behoove you know the law. I’ve attended a class on a few occasions given by Matt Isbell on COBRA. He really knows his stuff and gives you the tools to protect your position and your company.
Cal-COBRA ( for groups with less than 20 employees) is enforced by the California Department of Insurance and Department of Managed Health Care. Cal-COBRA is administered by the insurance carriers which is a good thing because small employers do not have the time to handle this! Check out the Department of Managed Health Care’s website, it will give you the skinny on the difference between Federal COBRA and Cal-COBRA.
Are you prepared to handle COBRA?