COBRA
Temporary Continuation of Healthcare Coverage
Entitlement to COBRA Continuation Coverage
In compliance with a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (commonly called COBRA), eligible Employees, eligible Retirees and their covered Dependents (called “Qualified Beneficiaries”) will have the opportunity to elect a temporary continuation of their group health coverage (“COBRA Continuation Coverage”) under the Plan when that coverage would otherwise end because of certain events (called “Qualifying Events” by the law).
Alternatives to COBRA
Note that you may also have other health coverage alternatives to COBRA available to you that can be purchased through the Health Insurance Marketplace. Also, in the Marketplace you could be eligible for a tax credit that lowers your monthly premiums for Marketplace-purchased coverage. Being eligible for COBRA does not limit your eligibility for coverage for a tax credit. For more information about the Health Insurance Marketplace, visit www.healthcare.gov. Also, you may qualify for a special enrollment opportunity for another group health plan for which you are eligible (such as a Spouse’s plan), if you request enrollment in that plan within 30 days, even if that plan generally does not accept late enrollees.
Qualified Beneficiaries who elect COBRA Continuation Coverage must pay for it at their own expense.
This Plan provides no greater COBRA rights than what is required by law and nothing in this chapter is intended to expand a person’s COBRA rights.
| IMPORTANT:
This chapter serves as a notice to summarize your rights and obligations under the COBRA Continuation Coverage law. It is provided to all covered Employees Retirees, and their covered Spouses and is intended to inform them (and their covered Dependents, if any) in a summary fashion about COBRA coverage, when it may become available and what needs to be done to protect the right to receive COBRA coverage. Since this is only a summary, actual rights will be governed by the provisions of the COBRA law itself. It is important that you and your Spouse take the time to read this notice carefully and be familiar with its contents. |
Who Is Entitled to COBRA Continuation Coverage, When and For How Long
Each Qualified Beneficiary has an independent right to elect COBRA Continuation Coverage when a Qualifying Event occurs, and as a result of that Qualifying Event that person’s health care coverage ends, either as of the date of the Qualifying Event or as of some later date. Covered Employees and Retirees may elect COBRA on behalf of their Spouses and covered parents/legal guardians may elect COBRA for a minor child. A Qualified Beneficiary also has the same rights and enrollment opportunities under the Plan as other covered individuals.
- “Qualified Beneficiary”: Under the law, a Qualified Beneficiary is any Employee or Retiree or the Spouse or Dependent Child of an Employee or Retiree who is covered by the Plan when a Qualifying Event occurs, and who is therefore entitled to elect COBRA Continuation Coverage. A child who becomes a Dependent Child by birth, adoption or placement for adoption with the covered Qualified Beneficiary during a period of COBRA Continuation Coverage is also a Qualified Beneficiary.
- A child of the covered Employee or Retiree who is receiving benefits under the Plan because of a Qualified Medical Child Support Order (QMCSO), during the Employee’s or Retiree’s period of employment, is entitled to the same rights under COBRA as an eligible Dependent Child.
- A person who becomes the new Spouse of an existing COBRA participant during a period of COBRA Continuation Coverage may be added to the COBRA coverage of the existing COBRA participant but is not a “Qualified Beneficiary.” This means that if the existing COBRA participant dies or divorces (or legal separation) before the expiration of the maximum COBRA coverage period, the new Spouse is not entitled to elect COBRA for him/herself.
- “Qualifying Event”: Qualifying Events are those shown in the chart below. Qualified Beneficiaries are entitled to COBRA Continuation Coverage when Qualifying Events (which are specified in the law) occur, and, as a result of the Qualifying Event, coverage of that Qualified Beneficiary ends. A Qualifying Event triggers the opportunity to elect COBRA when the covered individual LOSES health care coverage under this Plan. If a covered individual has a Qualifying Event but, as a result, does not lose their health care coverage under this Plan, ( g. Employee continues working even though entitled to Medicare) then COBRA is not available.
The following chart lists the COBRA Qualifying Events, who can be a Qualified Beneficiary and the maximum period of COBRA coverage based on that Qualifying Event:
- When a covered Employee’s Qualifying Event (e.g. termination of employment or reduction in hours) occurs within the 18-month period after the Employee becomes entitled to Medicare (entitlement means the Employee is eligible for and enrolled in Medicare), the Employee’s covered Spouse and Dependent Children who are Qualified Beneficiaries (but not the Employee) may become entitled to COBRA coverage for a maximum period that ends 36 months after the Medicare entitlement.
- Employer’s bankruptcy under Title 11 of the US Code may trigger COBRA coverage for certain Retirees and their related Qualified Beneficiaries such as COBRA coverage for the life of the Retiree. The Retiree’s Spouse and Dependent Children are entitled to COBRA for the life of the Retiree and if they survive the Retiree, for 36 months after the Retiree’s death. If the Retiree is not living when the Qualifying Event occurs, but the Retiree’s surviving Spouse is alive and covered by the Group Health Plan, then that surviving Spouse is entitled to coverage for life.
Maximum Period of COBRA Continuation Coverage
The maximum period of COBRA Continuation Coverage is generally either 18 months or 36 months, depending on which Qualifying Event occurred, measured from the date the Qualifying Event occurs. The 18-month period of COBRA Continuation Coverage may be extended for up to 11 months under certain circumstances (described in another section of this chapter on extending COBRA in cases of disability). The maximum period of COBRA coverage may be cut short for the reasons described in the section on “Early Termination of COBRA Continuation Coverage” that appears later in this chapter.
Medicare Entitlement
A person becomes entitled to Medicare on the first day of the month in which he or she attains age 65, but only if he or she submits the required application for Medicare benefits within the time period prescribed by law. Generally a person becomes entitled to Medicare on the first day of the 30th month after the date on which he or she was determined by the Social Security Administration to be totally and permanently disabled so as to be entitled to Social Security disability income benefits.
Special Enrollment Rights
You have special enrollment rights under federal law that allows you to request special enrollment under another group health plan for which you are otherwise eligible (such as a plan sponsored by your Spouse’s employer) within 30 days (or as applicable 60 days) after your group health coverage ends because of the Qualifying Events listed in this chapter. The special enrollment right is also available to you if you continue COBRA for the maximum time available to you.
Procedure for Notifying the Plan of a Qualifying Event (Very Important Information)
In order to have the chance to elect COBRA Continuation Coverage after a divorce, legal separation, or a child ceasing to be a “Dependent Child” under the Plan, you and/or a family member must inform the Plan in writing of that event no later than 60 days after that event occurs.
That written notice should be sent to the Trust Fund Office whose address is listed on the Quick Reference Chart in the front of the Summary Plan Description (SPD)/Plan Document. The written notice can be sent via first class mail, or be hand-delivered, and is to include your name and Social Security number, the name of the Fund (District Council 16 Northern California Health and Welfare Trust Fund), the event you are providing notice for, the date of the event, and the individual(s) affected by the Qualifying Event and their relationship to you.
If the Qualifying Event is your divorcing your Spouse, you must provide a copy of the divorce decree as soon as it becomes available.
If you have any questions about how to notify the Trust Fund of one of these events, please call the Trust Fund Office at (800) 922-9902.
| NOTE: If such a notice is not received by the Trust Fund Office within the 60-day period, the Qualified Beneficiary will not be entitled to choose COBRA Continuation Coverage. |
Officials of the Employee’s own employer should notify the Trust Fund Office of an Employee’s death, termination of employment, reduction in hours, or entitlement to Medicare. However, you or your family should also promptly notify the Trust Fund Office in writing if any such event occurs in order to avoid confusion over the status of your health care in the event there is a delay or oversight in providing that notification.
Notices Related to COBRA Continuation Coverage
When you or your employer notifies the Plan that your health care coverage has ended due to a Qualifying event, then the Trust Fund Office will give you and/or your covered Dependents notice of the date on which your coverage ends and the information and forms needed to elect COBRA Continuation Coverage. Failure to notify the Plan in a timely fashion may jeopardize an individual’s rights to COBRA coverage. Under the law, you and/or your covered Dependents will then have only 60 days from the date of receipt of that notice, to elect COBRA Continuation Coverage.
| NOTE: If you and/or any of your covered Dependents do not choose COBRA coverage within 60 days after receiving notice, you and/or they will have no group health coverage from this Plan after the date coverage ends. |
The COBRA Continuation Coverage That Will Be Provided
If you elect COBRA Continuation Coverage, you will be entitled to the same health coverage that you had when the event occurred that caused your health coverage under the Plan to end, but you must pay for it. See the section on Paying for COBRA Continuation Coverage that appears later in this chapter for information about how much COBRA Continuation Coverage will cost you and about grace periods for payment of those amounts. If there is a change in the health coverage provided by the Plan to similarly situated active Employees and their families, that same change will apply to your COBRA Continuation Coverage.
You and/or Your Dependents may elect:
- medical/prescription drug/substance abuse and mental health benefits, or
- medical/ prescription drug/substance abuse/mental health, dental, and vision benefits.
Paying for COBRA Continuation Coverage (The Cost of COBRA)
Any person who elects COBRA Continuation Coverage will have to pay the full cost of the COBRA Continuation Coverage. The Fund is permitted to charge the full cost of coverage for similarly situated active Employees and families, plus an additional 2%. If the 18-month period of COBRA Continuation Coverage is extended because of disability, the Plan may add an additional 50% applicable to the COBRA family unit (but only if the disabled person is covered) during the 11-month additional COBRA period.
Each person will be told the exact dollar charge for the COBRA Continuation Coverage that is in effect at the time he or she becomes entitled to it. The cost of the COBRA Continuation Coverage may be subject to future increases during the period it remains in effect.
Your first payment for continuation coverage must include payments for any months retroactive to the day your and/or your Dependents’ coverage under the Trust Fund terminated. This payment is due no later than 45 days after the date you or your Dependents signed the election form and returned it to the Trust Fund Office Eligibility Department.
| IMPORTANT
There will be no invoices or reminders for COBRA premium payments. You are responsible for making sure that timely COBRA premium payments are made to the Trust Fund Office. |
Grace Periods
The initial payment for the COBRA Continuation Coverage is due to the Trust Fund Office no later than 45 days after COBRA Continuation Coverage is elected. If this payment is not made when due, COBRA Continuation Coverage will not take effect. After the initial COBRA payment, subsequent payments are due by the 20th of the month prior to the month coverage is provided in order to ensure that your eligibility is accurately reported. There is a grace period of 30 days from the first day of each month for which coverage is provided. If payment is not received by the end of the grace period, all benefits will terminate immediately. Once your COBRA continuation coverage is terminated, it cannot be reinstated.
Payment is considered made when it is postmarked.
For Monthly Payments, What If The Full COBRA Premium Payment Is Not Made When Due?
If the Trust Fund Office receives a COBRA premium payment that is not for the full amount due, the Trust Fund Office will determine if the COBRA premium payment is short by an amount that is significant or not. A premium payment will be considered to be significantly short of the required premium payment if the shortfall exceeds the lesser of $50 or 10% of the required COBRA premium payment.
If there is a significant shortfall then COBRA continuation coverage will end as of the date for which the last full COBRA premium payment was made and the partial payment made will be returned to the participant or beneficiary.
If there is not a significant shortfall, the Trust Fund Office will notify the Qualified Beneficiary of the deficiency amount and allow a reasonable period of 30 days to pay the shortfall.
- If the shortfall is paid in the 30-day time period then COBRA continuation coverage will continue for the month in which the shortfall occurred.
- If the shortfall is not paid in the 30-day time period then COBRA continuation coverage will end as of the date for which the last full COBRA premium payment was made (which may result in a mid-month termination of COBRA coverage).
Health Coverage Tax Credit (HCTC)
The Trade Act of 2002 created a tax credit (called the Health Coverage Tax Credit or HCTC) for certain individuals who become eligible for trade adjustment assistance and for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC). Eligible individuals can either take a tax credit or get advance payment of 72.5% of premiums paid for qualified health insurance including COBRA. While the HCTC expired on January 1, 2014, it was reinstated to be effective for coverage periods through 2019. For more information, visit, www.irs.gov/HCTC
Confirmation of Coverage Before Election or Payment of the Cost of COBRA Continuation Coverage
If a Health Care Provider requests confirmation of coverage and you, your Spouse or Dependent Child(ren) have elected COBRA Continuation Coverage and the amount required for COBRA Continuation Coverage has not been paid while the grace period is still in effect or you, your Spouse or Dependent Child(ren) are within the COBRA election period but have not yet elected COBRA, COBRA Continuation Coverage will be confirmed, but with notice to the Health Care Provider that the cost of the COBRA Continuation Coverage has not been paid, that no claims will be paid until the amounts due have been received, and that the COBRA Continuation Coverage will terminate effective as of the due date of any unpaid amount if payment of the amount due is not received by the end of the grace period
Addition of Newly Acquired Dependents
If, while you (the Employee or Retiree) are enrolled for COBRA Continuation Coverage, you marry, have a newborn child, adopt a child, or have a child placed with you for adoption, you may enroll that Spouse or child for coverage for the balance of the period of COBRA Continuation Coverage if you do so within 31 days after the marriage or within 60 days of birth, adoption, or placement for adoption. Adding a Spouse or Dependent Child may cause an increase in the amount you must pay for COBRA Continuation Coverage. Contact the Trust Fund Office to add a Dependent.
Loss of Other Group Health Plan Coverage
If, while you (the Employee or Retiree) are enrolled for COBRA Continuation Coverage your Spouse or Dependent loses coverage under another group health plan, you may enroll the Spouse or Dependent for coverage for the balance of the period of COBRA Continuation Coverage. The Spouse or Dependent must have been eligible but not enrolled in coverage under the terms of the pre-COBRA Plan and, when enrollment was previously offered under that pre-COBRA healthcare Plan and declined, the Spouse or Dependent must have been covered under another group health plan or had other health insurance coverage.
The loss of coverage must be due to exhaustion of COBRA Continuation Coverage under another plan, termination as a result of loss of eligibility for the coverage, or termination as a result of employer contributions toward the other coverage being terminated. Loss of eligibility does not include a loss due to failure of the individual or participant to pay premiums on a timely basis or termination of coverage for cause. You must enroll the Spouse or Dependent within 31 days after the termination of the other coverage. Adding a Spouse or Dependent Child may cause an increase in the amount you must pay for COBRA Continuation Coverage.
Notice of Unavailability of COBRA Coverage
In the event the Plan is notified of a Qualifying Event but determines that an individual is not entitled to the requested COBRA coverage, the individual will be sent, by the Trust Fund Office an explanation indicating why COBRA coverage is not available. This notice of the unavailability of COBRA coverage will be sent according to the same timeframe as a COBRA election notice.
Extended COBRA Continuation Coverage When a Second Qualifying Event Occurs During an 18-Month COBRA Continuation Period
If, during an 18-month period of COBRA Continuation Coverage resulting from loss of coverage because of your termination of employment or reduction in hours, you die, become divorced or legally separated, become entitled to Medicare (Part A, Part B or both), or if a covered child ceases to be a Dependent Child under the Plan, the maximum COBRA Continuation period for the affected Spouse and/or child is extended to 36 months measured from the date of your termination of employment or reduction in hours (or the date you first became entitled to Medicare, if that is earlier, as described below). NOTE: Medicare entitlement is not a Qualifying Event under this Plan and as a result, Medicare entitlement following a termination of coverage or reduction in hours will not extend COBRA to 36 months for Spouses and Dependents who are Qualified Beneficiaries.
Notifying the Plan: To extend COBRA when a second Qualifying Event occurs, you must notify the Trust Fund Office in writing within 60 days of a second Qualifying Event. Failure to notify the Plan in a timely fashion may jeopardize an individual’s rights to extended COBRA coverage. The written notice can be sent via first class mail, or be hand-delivered, and is to include your name, the second Qualifying Event, the date of the second Qualifying Event, and appropriate documentation in support of the second Qualifying Event, such as divorce documents.
This extended period of COBRA Continuation Coverage is not available to anyone who became your Spouse after the termination of employment or reduction in hours. This extended period of COBRA Continuation Coverage is available to any child(ren) born to, adopted by or placed for adoption with you (the covered Employee) during the 18-month period of COBRA Continuation Coverage.
In no case is an Employee whose employment terminated or who had a reduction in hours entitled to COBRA Continuation Coverage for more than a total of 18 months (unless the Employee is entitled to an additional period of up to 11 months of COBRA Continuation Coverage on account of disability as described in the following section). As a result, if an Employee experiences a reduction in hours followed by termination of employment, the termination of employment is not treated as a second Qualifying Event and COBRA may not be extended beyond 18 months from the initial Qualifying Event.
In no case is anyone else entitled to COBRA Continuation Coverage for more than a total of 36 months (except for Retirees who become entitled to COBRA because of a Chapter 11 bankruptcy reorganization proceeding on the part of the Employee’s employer.)
Extended COBRA Coverage in Certain Cases of Disability During an 18-Month COBRA Continuation Period
If, prior to the Qualifying Event or during the first 60 days of an 18-month period of COBRA Continuation Coverage, the Social Security Administration makes a formal determination that you or a covered Spouse or Dependent Child is totally and permanently disabled so as to be entitled to Social Security Disability Income benefits (SSDI), the disabled person and any covered family members who so choose, may be entitled to keep the COBRA Continuation Coverage for up to 29 months (instead of 18 months) or until the disabled person becomes entitled to Medicare or ceases to be disabled (whichever is sooner).
- This extension is available only if:
- the Social Security Administration determines that the individual’s disability began at some time before the 60th day of COBRA Continuation Coverage; and
- the disability lasts until at least the end of the 18-month period of COBRA Continuation Coverage.
Notifying the Plan: you or another family member follow this procedure (to notify the Plan) by sending a written notification to the Trust Fund Office of the Social Security Administration determination within 60 days after that determination was received by you or another covered family member. Failure to notify the Plan in a timely fashion may jeopardize an individual’s rights to extended COBRA coverage. The written notice can be sent via first class mail, or be hand-delivered, and is to include your name, the request for extension of COBRA due to a disability, the date the disability began and appropriate documentation in support of the disability including a copy of the written Social Security Administration disability award documentation, and that notice must be received by the Trust Fund Office before the end of the 18-month COBRA Continuation period.
- The cost of COBRA Continuation Coverage during the additional 11-month period of COBRA Continuation Coverage may be 50% higher than the cost for coverage during the first 18-month period.
- The Trust Fund Office must also be notified within 30 days of the determination by the Social Security Administration that you are no longer disabled.
California COBRA Law
If you are a COBRA Participant enrolled in the medical HMO Plan, California law has two provisions that affect the length of time you may continue coverage. These laws apply only to your medical HMO coverage, not to any other health care benefits usually available under COBRA.
If your Qualifying Event was low hours, termination of your employment, or retirement and you exhaust the 18 months of coverage normally available after such a Qualifying Event (or the 29 months available in the case of disability), you may continue your HMO coverage an additional 18 months (or an additional 7 months in the case of a disability). If this applies to you, you must contact the HMO directly to continue coverage.
Early Termination of COBRA Continuation Coverage
Once COBRA Continuation Coverage has been elected, it may be cut short (terminated early) on the occurrence of any of the following events:
- The date the Fund no longer provides group health coverage to any of its Employees;
- The date the amount due for COBRA coverage is not paid in full on time;
- The date the Qualified Beneficiary becomes entitled to Medicare (Part A, Part B or both) after electing COBRA;
- The date, after the date of the COBRA election, on which the Qualified Beneficiary first becomes covered under another group health plan and that plan does not contain any legally applicable exclusion or limitation with respect to a Pre-Existing Condition the Qualified Beneficiary may have. Such pre-existing condition exclusions will become prohibited beginning with the plan year in 2014.
- During an extension of the maximum COBRA coverage period to 29 months due to the disability of the Qualified Beneficiary, the disabled beneficiary is determined by the Social Security Administration to no longer be disabled;
- The date the Plan has determined that the Qualified Beneficiary must be terminated from the Plan for cause (on the same basis as would apply to similarly situated non-COBRA participants under the Plan).
Notice of Early Termination of COBRA Continuation Coverage
The Plan will notify a Qualified Beneficiary if COBRA coverage terminates earlier than the end of the maximum period of coverage applicable to the Qualifying Event that entitled the individual to COBRA coverage. This written notice will explain the reason COBRA terminated earlier than the maximum period, the date COBRA coverage terminated and any rights the Qualified Beneficiary may have under the Plan to elect alternate or conversion coverage. The notice will be provided as soon as practicable after the Trust Fund Office determines that COBRA coverage will terminate early.
Entitlement to Individual Conversion Coverage for HMO Participants Only
If you and your eligible Dependents are enrolled in the medical HMO and your eligibility for benefits ceases under the Plan, you may apply for conversion of your group coverage to an individual policy.
You should read the material that you receive from the HMO very carefully. The coverage will not be identical to that which you had while a Plan Participant. Benefits under individual policies are usually provided at lower levels than those found in group policies.
In order to take advantage of the individual conversion option, you must notify the HMO as soon as possible following your loss of eligibility. You must submit your conversion application and initial premium within 31 days from your loss of eligibility. You may elect this option instead of the Plan’s COBRA program. In addition, when coverage under COBRA is terminated, you may apply for individual conversion at that time.
Choosing Not to Elect COBRA
If you and/or your Dependents do not elect COBRA within the 60-day period allowed, you will forfeit all rights to COBRA continuation coverage and your health care coverage will end. If you are enrolled in the medical HMO, you may apply for an individual conversion policy.
In considering whether to elect COBRA continuation coverage, you should take into account that a failure to continue your group health coverage will affect your future 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 employer). Special enrollment under this provision is allowed within 30 days after your group health coverage ends because of the qualifying events (which are specified in the law) or at the end of COBRA continuation coverage if you get COBRA continuation coverage for the maximum time available to you.