b'COBR AWho is eligible for COBRA? How much does COBRA coverage cost?The general rule is that COBRA applies to I often hear people complain about the prohibi-Continuation Coverageand health plans that are maintained by employers tive cost of COBRA insurance coverage. In reality, that employed at least 20 employees on more thanCOBRA continuation coverage costs the same as 50% of its typical business days in the previouswhat was being charged before the separation from theSmall Employer Exception calendar year. When counting employees, both employment (plus an additional 2% administrative full-time and part-time employees are included,allowance). The reason for the sticker shock, how-with part-time employees counting as a fraction ever, is that the employee and/or his or her depen-of a full-time employee. For example, if full-timedents are now responsible to pay the entire premium work is considered to be 40 hours per week, a amount without employer contribution. In most 20-hour per week employee is counted as one-halfcases, these individuals never knew or appreciated of an employee. COBRA also applies to plans spon- the value of the premium that was being paid by sored by state and local governments, but it does nottheir employer, so they incorrectly believe the cost apply to plans sponsored by the federal governmentof the COBRA coverage has skyrocketed or they are or by churches. being gouged. (It should be noted that in situations Note:Eachqualifiedbeneficiaryhasanindependent involvingadisabledqualifiedbeneficiary,premiumCOBRA right and can elect COBRA continuationcan be as high as 150% of the premium charged to coverage regardless of whether the (former) em- an active participant.)ployee elects COBRA. Additionally, each COBRAWhat is thebeneficiaryisfreetoterminatetheirindividual Small Employer Exception to COBRA?coverage whenever they want without affecting the COBRA status of the other family members. As you can see from the aforementioned eligi-bility rule, certain group health plans and small How long does COBRA coverage last? employer plans are exempt from the COBRA law. The general answer to this question is that COBRAFor purposes of the small employer plan exception, coverage can be elected for up to 18 months. Thea small employer is one that normally employed specificrule,however,isthatdurationofones fewer than 20 common law employees on a typical COBRA coverage depends on the nature of thebusiness day during the preceding calendar year.It qualifying event (i.e., the reason the plan participantis important to note this determination is based on lost coverage). When the qualifying event is thethe number of employed employees, not the number covered employees reduction of hours or termina- of participants in the health plan.tion of employment (except for gross misconduct),Acknowledgment of Stolen Materialallqualifiedbeneficiariesareindependentlyentitledto continue their group coverage for up to 18Much of the information in this article has been months. If the covered employee has died, divorced,pirated from the US Department of Labor. If you or become entitled to Medicare, the employeeswould like to learn more about COBRA, feel free spouse and dependents are allowed to continue theirto contact me or visit the Department of Labors coverage for up to 36 months. A dependent childwebsite at www.dol.gov.who has reached the limiting age is also allowed to remain on the plan for up to 36 months. Addition- If you have questions ally, COBRA provides that the 18-month coverageabout this article or limitation can be extended for an additional 11would like to discuss months (up to 29 months) in the event of disability. S your companys health insurance progam, feel free to contact me at (801) 263-8000 or info@wmimutual.com. WPMA News / Spring 202021'