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COBRA Q & A
Employers

Q.) What is COBRA?
A.) COBRA is a federal law that allows a qualified beneficiary who loses group health plan coverage to elect to continue their coverage for a limited time, on a self-pay basis.

Q.) What Employers and Plans Are Subject to COBRA?
A.) Private and public sector employers that provide group health plans to their employees are subject to COBRA, as long as they employ 20 or more individuals. Generally speaking, group health plans for employers with 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA. Both full and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time

Q.) When does a Qualifying Event occur?
A.) A qualifying event occurs when a triggering event (such as termination) causes a loss of coverage for a covered employee.

Q.) How Long Does COBRA Coverage Last?
A.) The duration of basic COBRA coverage is generally 18 months for termination or a reduction in hours. COBRA coverage may extend to 36 months for other types of qualifying events. There are ways that COBRA coverage can be extended (such as notification of disability). For more information regarding these extensions, contact your COBRA administrator at Ben-X.

Q.) Who Must Be Offered COBRA?
A.) Qualified Beneficiaries must be offered COBRA coverage. Qualified Beneficiaries consist of covered employees, spouses, former spouses, and dependent children.

Q.) What Type of Coverage Must Be Offered Under COBRA?
A.) The coverage that is offered under COBRA must be identical to the coverage that the qualified beneficiary had before their qualifying event. Essentially, what the qualified beneficiary had under their group health plan, the qualified beneficiary will receive under COBRA.

Q.) How Much Can a Plan Charge For COBRA Continuation Coverage?
A.) COBRA continuation coverage is paid entirely by the qualified beneficiary, and then Ben-X has the right to charge 2% of the applicable premium.

Q.) What are the penalties for failing to comply with COBRA?
A.) The applicable penalties will depend on whether you are a private or public sector employer. If you are a private sector employer, you are subject to fines up to $110/day under ERISA, and excise taxes up to $100/day under the Internal Revenue Code. If you are a public sector employer, you are subject to all applicable fines and penalties under the PHSA. Failure to comply with COBRA may also result in costly lawsuits with possible qualified beneficiaries.