HR/Payroll Solutions
Identify when COBRA coverage starts
Q: An employee is leaving our company on Feb. 16. Employees are permitted to remain on our health insurance plan through the end of their final month. Is my benefits broker correct in saying that the employee's COBRA coverage would start March 1?
A: Listen to your benefits broker and use the March 1 date. Under COBRA, “coverage begins on the date that health care coverage would otherwise have been lost by reason of a qualifying event” according to the Department of Labor in FAQs About COBRA Continuation Health Coverage.
When determining whether employees and/or their qualified dependents are eligible for COBRA and the COBRA effective date, start by considering these two questions:
- Has the employee and/or their qualified dependents experienced a “qualifying event”?
- What is the date of the “qualifying event”?
A qualifying event according to COBRA may be:
- A voluntary or involuntary termination (other than for gross misconduct).
- Reduction in work hours.
- Death.
- Divorce or legal separation.
- Change in the status of a dependent child.
- Medicare entitlement of the employee.
- Bankruptcy (Chapter 11) of the employer from whom retired covered employees or their beneficiaries are receiving benefits.
If there is a qualifying event, look at your plan documents to see the outlined provisions to assist you in identifying the qualifying event when the employee would otherwise lose coverage to your company-sponsored health insurance.
In the situation stated above, your plan runs through the end of the month in which the qualifying event occurs. Some company plans provide that insurance will cease on the date of the employee's qualifying event. Other employer plans may end on the 15th of the month. Don't forget to verify that the employee was enrolled in your company plan the day before the date of the qualifying event.
Article by Deb Levine, SPHR is an information specialist in SHRM's Information Center from http://www.shrm.org/kc/solutions/articles/archives/CMS_019828.asp#P-8_0