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WHAT
IS COBRA?
The federal Consolidated Omnibus Budget Reconciliation Act (COBRA)
of 1985 requires that most employers sponsoring group health plans
offer employees and their eligible dependents — also known under
COBRA as "qualified beneficiaries" — the opportunity to
temporarily extend their group health coverage in certain instances
where coverage under the plan would otherwise end. For State Health
Benefits Program (SHBP) and School Employees' Health
Benefits Program (SEHBP) participants, COBRA is not a separate health
program; it is a continuation of SHBP or SEHBP coverage under the provisions
of the federal law.
WHO
IS ELIGIBLE FOR COBRA?
Employees
enrolled in the SHBP or SEHBP may continue coverage under COBRA, in any plan
that the employee is eligible for, if coverage ends because of a:
- Reduction
in working hours;
- Leave of
absence; or
- Termination
of employment for reasons other than gross misconduct.
Spouses, civil union partners, or eligible same-sex domestic partners* of employees enrolled in the
SHBP or SEHBP may continue coverage under COBRA, in any plan that the employee
is eligible for, if coverage ends because of the:
- Death of
the employee;
- End of the
employee's coverage due to a reduction in working hours, leave
of absence, or termination of employment for reasons other than
gross misconduct;
- Divorce or
legal separation of the employee and spouse;
- Dissolution of a civil union or domestic partnership; or
- Election
of Medicare as the employee's primary insurance carrier (requires
dropping the group coverage carried as an active employee).
*For more information about health benefits for domestic partners, including eligibility requirements, see
Fact Sheet #71, Benefits Under the Domestic Partnership Act. For more information about health benefits for civil union partners see Fact Sheet #75, Civil Unions. |
Dependent
children of employees in the SHBP or SEHBP may continue coverage under
COBRA, in any plan that the employee is eligible for, if coverage
ends because of the:
- Loss of dependent
child's eligibility through independence (moving out of the household),
the attainment of age 23, marriage, or entering into a civil union or domestic
partnership;
- Death of
the employee;
- End of the
employee's coverage due to a reduction in working hours, leave
of absence, or termination of employment for reasons other than
gross misconduct; or
- Election
of Medicare as the employee's primary insurance carrier (requires
dropping the group coverage carried as an active employee).
Note: Each "qualified beneficiary" may independently elect COBRA
coverage to continue in any or all of the coverage you had as an
active employee or dependent (medical, prescription drug, dental,
and/or vision). You and/or your dependents may change your medical
and/or dental plan when you enroll in COBRA. You may also elect
to cover the same dependents you had as an active employee, or you
can delete dependents to reduce your level of coverage. However,
you cannot increase the level of your coverage, except during
the annual Open Enrollment period, unless a qualifying event occurs
(birth, adoption, marriage, civil union, eligible domestic partnership) and you
notify the Division of Pensions and Benefits' COBRA Administrator within 60 days of the qualifying
event.
HOW
LONG WILL COBRA COVERAGE LAST?
The length
of your COBRA coverage continuation depends on the nature of the
COBRA qualifying event that entitled you to the coverage.
- For loss
of coverage due to termination of employment, reduction of hours,
or leave of absence, the employee and/or dependents are entitled
to 18 months of COBRA coverage. Time on leave of absence just
before enrollment in COBRA, unless under the federal and/or
State Family Leave Act, counts toward the 18-month period
and will be subtracted from the 18 months. Time a member spends
on federal or State leave will not count as part of the
COBRA eligibility period.
- If you receive
a Social Security Administration disability determination for
an illness or injury you had when you enrolled in COBRA or incurred
within 60 days of enrollment, you and your covered dependents
are entitled to an extra 11 months of coverage up to a maximum
of 29 months of COBRA coverage. You must provide proof within
60 days of the disability determination from the Social Security
Administration or within 60 days of COBRA enrollment.
- For loss
of coverage due to the death of the employee, divorce or legal
separation, dissolution of a civil union or domestic partnership, other dependent
ineligibility, or Medicare entitlement, the continuation term
for dependents is 36 months.
HOW
MUCH WILL I PAY FOR COVERAGE?
You are responsible
for paying the cost of your coverage under COBRA which is the full
group rate plus a 2 percent administration fee. The Division of Pensions and Benefits will bill
you on a monthly basis.
EMPLOYEE
/ QUALIFIED BENEFICIARY RESPONSIBILITIES UNDER COBRA
The law requires
that employees and/or their dependents:
- Keep your
employer and the Division of Pensions and Benefits informed
of any changes to the address information of all possible "qualified
beneficiaries."
- Notify your
employer that a divorce, legal separation, dissolution of a civil union or
domestic partnership, or the death of the employee has occurred
or that a dependent child has married, entered into a civil union or domestic
partnership, moved out of the household, or reached age 23 — notification
must be given within 60 days of the date the event occurred (If
you do not inform your employer of the change in dependent status
within the 60 day requirement, you may forfeit your dependent's
right to COBRA);
- File a COBRA
Application within 60 days of the loss of coverage or the
date of the COBRA Notice provided by your employer, whichever
is later;
- Pay the required
monthly premiums in a timely manner;
- Pay premiums,
when billed, retroactive to the date of group coverage termination;
- Notify the
Division of Pensions and Benefits' COBRA Administrator, in writing, of any second qualifying
event that results in an extension of the maximum coverage period
(see How Long Will COBRA Coverage Last?);
- Notify the
Division of Pensions and Benefits' COBRA Administrator, in writing, of a Social Security Administration
disability award within 60 days of receipt of the award, or within
60 days of COBRA enrollment (this will extend the maximum COBRA
coverage period from 18 months to 29 months — see How
Long Will COBRA Coverage Last?); and
- Provide notice
of any determination that a "qualified beneficiary"
who had received a disability extension is no longer disabled.
This notice must be sent to the Division of Pensions and Benefits' COBRA Administrator within
30 days of determination by the Social Security Administration.
Failure to provide timely notification may result in adjustments
to any claims paid erroneously.
EMPLOYER
RESPONSIBILITIES UNDER COBRA
The
COBRA law requires employers to:
- Notify employees
and their dependents of the COBRA provisions within 90 days of
when the employee and their dependents are first enrolled in the
SHBP or SEHBP by mailing a notification letter to their home;
- Notify employees,
their spouse or partner, and their
children of the right to purchase continued coverage within 14
days of receiving notice that there has been a COBRA qualifying
event that causes a loss of coverage;
- Send the
COBRA Notification Letter and a COBRA Application
within 14 days of receiving notice that a COBRA qualifying event
has occurred. The notice outlines the right to purchase continued
health coverage, gives the date coverage will end, and the period
of time over which coverage may be extended;
- Notify the
Division of Pensions and Benefits within 30 days of the date of an employee/dependent's qualifying
event or loss of coverage. (An employee's loss of coverage is
reported by completing a Transmittal of Deletions Sheet.
A dependent's loss of coverage is reported through the Division's receipt of a completed health benefit application terminating the dependent's
coverage.);
- Maintain
records documenting their compliance with the COBRA law.
ENROLLING
FOR COBRA COVERAGE
The employee
and/or the dependent seeking coverage is responsible for submitting
a properly completed COBRA Application to the Health Benefits
Bureau of the Division of Pensions and Benefits.
This application must be filed within 60 days of the loss of coverage
or of the date of employer notification, whichever is later. Failure
to submit the application within the time frame allowed by law is
considered a decision not to enroll.
- In considering
whether to elect continuation of coverage under COBRA, you should
take into account that you cannot enroll at a later date
and that a failure to continue your group health coverage may
affect your future rights under federal law (see Failure
to Elect COBRA Coverage).
- If you
are retiring, you may be eligible for lifetime health, prescription
drug, and dental coverage through the Retired Group of the SHBP or SEHBP. Consult your employer or the Division
of Pensions and Benefits prior to enrolling for these benefits
under COBRA.
FAILURE
TO ELECT COBRA COVERAGE
In
considering whether to elect continuation of coverage under COBRA,
a "qualified beneficiary" should take into account that
a failure to continue group health coverage will affect future
rights under federal law.
-
First,
you can lose the right to avoid having pre-existing condition
exclusions applied to you by other group health plans if you
have more than a 63-day gap in health coverage. The election
of continuation of coverage under COBRA may help you to bridge
such a gap (see information about pre-existing conditions under
Termination of COBRA Coverage).
-
Second,
you will lose the guaranteed right to purchase individual health
insurance policies that do not impose pre-existing condition
exclusions if you do not continue coverage under COBRA for the
maximum time available to you.
-
Finally,
you should take into account that you have special enrollment
rights under federal law. You have the right to request special
enrollment in another group health plan for which you are otherwise
eligible (such as a plan sponsored by your spouse's/partner's employer)
within 30 days of the date your group coverage ends. You will
also have the same special enrollment right at the end of the
COBRA coverage period provided the continuation of coverage
under COBRA is for the maximum time available to you.
AFTER
YOU HAVE ENROLLED IN COBRA
You should
be aware of the following information after you have enrolled in
COBRA:
Upon receipt of your letter, you will be sent a COBRA change form.
To increase coverage, you have 60 days from the date of the qualifying
event to make the change. To change plans, because you have moved
out of your plan's service area, you have 30 days to make the
change. These changes must be requested within the specified time
frames, otherwise they may only be made during the Open Enrollment
period. You may decrease your coverage (delete a dependent) at
any time.
TERMINATION
OF COBRA COVERAGE
Your COBRA
benefits under the SHBP or SEHBP will terminate for any of the following
reasons:
- Your employer
(or former employer) no longer provides SHBP or SEHBP coverage to any of
its employees. In this case, your employer will give you the opportunity
to continue COBRA coverage through their new insurance plan for
the balance of your COBRA continuation period;
- You become
covered under another group plan as either an employee or dependent
after you elect COBRA coverage (unless that plan has a pre-existing
condition clause). If, after enrolling in COBRA you obtain new
coverage which has a pre-existing condition clause, you may continue
your COBRA enrollment at full cost for coverage of the condition
excluded by the pre-existing condition clause. To be eligible
for the continued COBRA coverage you will have to provide information
about the pre-existing condition clause to the COBRA administrator
and only the pre-existing condition will be covered. You
will be allowed to continue your COBRA coverage to its normal
end date or when the pre-existing condition clause ends, whichever
comes first;
- You become
eligible for Medicare after you elect COBRA coverage (affects medical insurance coverage only, does not affect dental, prescription
drug, or vision care coverage);
- Your fail
to pay your premiums; or
- Your eligible
coverage continuation period ends.
MORE
INFORMATION
If you need
additional information about COBRA, see your Human Resources Representative
or Benefits Administrator, or contact the Division of Pensions and
Benefits Office of Client Services at (609) 292-7524, or send an
e-mail to: pensions.nj@treas.state.nj.us
A NOTE ABOUT COVERAGE FOR CHILDREN AGE 23 UNTIL AGE 31
The Division of Pensions and Benefits has specific guidelines about providing health coverage to children past the age of 23 until age 31 due to the enactment of Chapter 375, P.L. 2005. A child who attains age 23 and needs continued coverage can select either COBRA coverage or Chapter 375 coverage for medical benefits. Rates for COBRA coverage and Chapter 375 coverage can change annually, be sure to compare the rates prior to enrolling in either program. To see a cost comparison, go to the Division of Pensions and Benefits Web site at: www.state.nj.us/treasury/pensions/cobrav375.htm
Chapter 375 does not cover vision or dental benefits. If your child wishes to obtain those coverages, he or she must apply for them under COBRA.
The eligibility requirements for Chapter 375 are outlined in Fact Sheet #74, Health Benefit Coverage of Children Until Age 31 Under Chapter 375, which is available on our Web site.
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