What changes have been made to COBRA and how do they benefit me?

Ever heard the phrase “You don’t know what you got till it’s gone”?

This phrase has never rung more true, then when an employee leaves their employer.

When an employee leaves their employer not only are they giving up their position and income. They’re also giving up their benefits (i.e. Medical, Dental, Vision etc.).

That’s where COBRA comes in; COBRA is the “Consolidated Omnibus Reconciliation Act” and allows a prior employee to maintain medical coverage after they have severed employment. Regardless of whether the employee left the company voluntary or was forced out, COBRA allows them to keep their benefits for up to 18 months, in the State of New York it has been amended to 36 months as of Nov 2009.

Any employer MUST notify their employees that they’re eligible for continued coverage under COBRA within 60 Days, failure to do so can lead to legal ramifications. Employers should make sure their compliant with COBRA laws; this can be accomplished through the use of an ERISA attorney to ensure all proper documentation is being communicated in a timely manner to avoid conflicts.

Most recently the “COBRA Continuation Coverage Assistance Under ASSA” has be updated. For employees that were forced out of their employment, this Act has provided “Health Insurance Premium Subsidy”.

Under this Act “eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must occur during the period that began September 1, 2008 and ends on February 28, 2010. The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.

For more information: http://www.dol.gov/ebsa/cobra.html

COBRA is a valuable tool for employers and employees to maintain coverage for themselves and their families.

If you have any questions, I’d be more than helpful to answer them (631) 338-9917.

Related Posts: Using a Health Savings Account to pay for Cobra