CPI
6421 Perkins Rd., Building 1 Suite 2A
Baton Rouge, LA 70808
225-215-2203 (phone)
225-706-0280 (fax)

Questions and Answers

What is COBRA?

COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985. It was enacted to provide employees and their families, the ability to continue temporary health coverage under certain circumstances. In general, the Act applies to workers who lose their job (voluntarily or involuntarily), change jobs or have their work hours reduced. The Act also covers dependents who lose coverage due to death of a spouse, divorce, legal separation, dependents who lose their dependent status under your health plan and dependents who lose coverage as a result of an employee becoming entitled to Medicare benefits.

There are seven events that allow employees and/or their dependents to become eligible for COBRA.

1. Termination (voluntary or involuntary)
2. Reduction of work hours
3. Divorce or legal separation
4. Death of a covered employee
5. Dependent child ceases to be a dependent under your Plan
6. Employee's entitlement to Medicare
7. Bankruptcy of employer

Which plans are subject to COBRA?

COBRA applies to an employer's group health plan. The term "group health plan" is sometimes misunderstood as only a medical plan. For COBRA purposes, the term "group health plan" includes health, dental, vision, prescription coverage and medical reimbursement options. A qualified beneficiary may only elect continuation for those benefits in which he was covered immediately prior to the qualifying event. CPI provides administration for your group health plans sponsored by The OATH.

Who is eligible for COBRA?
A person who is eligible for COBRA is often called a Qualified Beneficiary. A qualified beneficiary may be the employee, covered spouse of the employee, covered child of the employee or any child born to, or placed for adoption with the covered employee during the period of coverage continuation.

Qualified beneficiaries must be enrolled in the employer's health plan on the day before the qualifying event.

What rights do Qualified Beneficiaries have under COBRA?
Each Qualified Beneficiary has the same rights under the group health plan as a "similarly situated active employee". In other words, once a COBRA qualifying event occurs, an employee's covered spouse (or dependent child) has the same rights as an active employee. Each Qualified Beneficiary may make his/her own Plan decisions.

Can a qualified beneficiary add COBRA coverage for a new spouse or child?
Yes. COBRA participants have the same rights to add coverage as "similarly situated active employees." Your plan will specify the amount of time allowed to add coverage for a new spouse or child (or to delete coverage). Family members may also be added or deleted during open enrollment.

What is a Qualifying Event?
There are several events that can cause a loss of coverage.

18 Month Qualifying Events:
· termination of employment (voluntary or involuntary, excluding gross misconduct)
· reduction of work hours (strike, layoff, full-time to part-time, etc.)

An 18 Month time frame can be extended due to a second event or a disability.

36 Month Qualifying Events:
· death of a covered employee
· divorce or legal separation
· employee's Medicare entitlement
· Dependent child ceases to be a dependent

Bankruptcy of an employer is also a Qualifying Event under COBRA. Because the issues are more complex, you should contact CPI if this applies to your company.

Who is responsible for notifying CPI of a Qualifying Event?
When a Qualifying Event occurs, CPI must be notified as soon as possible and within 30 days. The employer is responsible for knowing when any of the following Qualifying Events have occurred:

· Termination of employment
· Reduction of work hours
· Death of employee
· Medicare entitlement
· Employer's bankruptcy

The employee or other qualified beneficiary must inform the employer of plan administrator of the following Qualifying Events:

· Divorce or legal separation
· Dependent child ceases to be a dependent

The employee or Qualified Beneficiary must inform the employer or plan administrator
Within 60 days from the later of the date of the event or the date which coverage would be lost on account of the event. In turn, the employer must notify CPI as soon as possible but within 30 days.

How long can someone stay on COBRA?
COBRA coverage runs for either 18 or 36 months. (Disabled individuals may remain on COBRA up to 29 months.)

What happens after CPI is notified of a qualifying event?
CPI will prepare and send a COBRA Qualifying Event notice to all qualified beneficiaries within 14 days of your notifying us of a Qualifying Event. The individual has up to 60 days (from the later of the date coverage terminates or the date the election notice is sent) to decide if they want COBRA coverage. Each family member may elect to be covered independently, provided they had the coverage immediately prior to the qualifying event.

What happens if a qualified beneficiary does not want COBRA coverage?
Health benefits cease as of the original date that the qualified beneficiary lost coverage if COBRA is declined or not elected.

When are premiums due and how are they collected?
CPI handles premium collection and remittance. A beneficiary has 60 days to decide if they want COBRA coverage. This means that a beneficiary may need to pay several months of premiums at one time (retroactively) to bring their COBRA coverage current.

Under what circumstances can COBRA coverage be terminated?
COBRA coverage ends when a qualified beneficiary exhausts the maximum coverage period (18 or 36 months). However, coverage may also be terminated if premiums are not paid or if the employer terminates group coverage for the entire company. Coverage may also be terminated if a beneficiary becomes qualified under another group's health plan or becomes entitled to Medicare benefits.