Post-Employment Insurance: Your Rights Under COBRA
Federal COBRA law requires most private employers to continue to make existing group health insurance available to workers who are discharged or resign from employment. All employees who are discharged as a result of voluntary or involuntary termination, such as for poor performance, negligence, or inefficiency (with the exception of those who are fired for gross misconduct), may elect to continue plan benefits currently in effect at their own cost provided the employee or beneficiary makes an initial payment within 30 days of notification and is not covered under Medicare or any other group health plan. The law also applies to qualified beneficiaries who were covered by the employer's group health plan the day before the discharge. Thus, for example, if the employee chooses not to continue such coverage, her spouse and dependent children may elect continued coverage at their own expense.
The extended coverage period is 18 months upon termination of the covered employee; upon the death, divorce, or legal separation of the covered employee, the benefit coverage period is 36 months to spouses and dependents.
The law requires that employers or plan administrators separately notify all employees and covered spouses and dependents of their rights to continued coverage. After receiving such notification, the individual has 60 days to elect to continue coverage. Additionally, employees and dependents whose insurance is protected under COBRA must be provided with any conversion privilege otherwise available in the plan (if such coverage exists) within a six-month period preceding the date on which coverage would terminate at the end of the continuation period.
Some employers run afoul of the law in failing to follow rules regarding notification requirements, conversion privileges, excluded individuals, and time restrictions. In the event the employer fails to offer such coverage, the law imposes penalties ranging from $100 to $200 per day for each day the employee is not covered and other damages.
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Copyright 1998 Steven M. Sack
