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With the high costs of medical care, maintaining health
coverage is very important to most individuals and
families. Illinois law does not require employers to
provide health benefits for their employees or their
families. However, if you are covered by an employer's
health benefits, loss of coverage can be devastating.
State and federal laws give certain employees, spouses
and dependent children the right to continue
employer-sponsored health benefits at group rates if
they lose their benefits because of specific qualifying
events. The type of qualifying event determines who is
qualified for continued coverage and for how long.
This fact sheet provides specific information
on the federal continuation
requirements under COBRA , the
Consolidated Omnibus Budget Reconciliation Act, and
compares its basic provisions to three other
continuation laws: the Illinois Continuation Law,
the Illinois Spousal Continuation Law and the
Illinois Dependent Child Continuation Law . The
chart at the bottom of this fact sheet provides a
comparison of the laws pertaining to continuation of
health benefits.
Under all four laws:
The employer or plan administrator must notify you of
your right to continue your health benefits when certain
qualifying events have occurred. If
both the state and federal laws apply to your situation,
the employer or plan administrator must offer you both
options. You must choose one or the other option.
NOTE: In some cases, the spouse, former
spouse, dependent child or guardian must notify the
employer and/or insurer that a qualifying event
has occurred, such as divorce from or death of
the covered employee or attainment of the limiting age
by the dependent child. If you don't give proper
notification, your continuation rights may be lost.
Once you are offered continuation, you must elect to
continue coverage within a certain time period, called
the election period. If you don't tell
the employer you want to continue coverage before the
election period expires, you may lose your right to
continue coverage. If you have the option of either the
state or federal continuations, once you make your
choice, you can't change your decision if the
election period has expired.
Coverage will continue for the maximum amount of time
required by law. However, coverage may end earlier in
some cases, such as when the beneficiary becomes
eligible for Medicare, or if the employer no longer
offers any group health insurance benefits for
employees.
You must pay the entire premium for
the coverage, including the part you used to pay as well
as the part the employer paid before the qualifying
event. In addition, you may also be required to pay an
administrative fee under certain circumstances for COBRA
and Spousal Continuation.
Your group insurance certificate, evidence of coverage
or benefit plan summary booklet explains your options
and responsibilities in detail. You should read the
information now. Don't wait until you need your
continuation rights.
What Is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act of
1985) is a federal law, enforced by the U.S. Department
of Labor, Employee Benefits Security Administration,
which provides continuation of group health
coverage that otherwise might be terminated.
The law contains provisions giving certain former
employees, retirees, spouses and dependent children the
right to temporary continuation of health coverage at
group rates.
Which Plans Are Subject To COBRA?
COBRA applies to group health plans maintained by
employers who had 20 or more employees on more than 50%
of the business days in the prior calendar year, and
plans sponsored by state and local governments. The
following types of group health plans are subject to
COBRA:
-
Insured and self-insured group health plans;
-
HMOs;
-
Employee assistance plans that provide benefits
beyond referral services such as counseling
sessions;
-
Dental plans;
-
Vision plans;
-
Retiree health plans;
-
Health flexible spending accounts;
-
Employer discount programs maintained by health care
clinics where the program is utilized exclusively by
employees with health or medical needs;
-
Employer reimbursed health insurance policies
purchased to bridge coverage under the employer's
group health plan (certain restrictions apply).
Cobra does not apply to:
-
Small employer plans (under 20 employees);
-
Certain church plans;
-
Plans sponsored by the federal government (e.g.
federal employee or military personnel plans);
-
Disability income plans;
-
Life insurance and accidental death and
dismemberment plans;
-
Long term care coverage;
-
Amounts contributed by an employer to a Medical
Savings Account.
Who Is Eligible For Continuation Coverage Under
COBRA?
A qualified beneficiary under COBRA
includes an employee, spouse, or dependent child who is
covered under the group health plan on the day before
the qualifying event . A child born to
or placed for adoption with a covered employee during a
period of COBRA coverage is also a qualified beneficiary
if COBRA has been elected and the child has been
enrolled upon birth or adoption. Note that an event is a
qualifying event only if it causes the qualified
beneficiary to lose coverage under the plan.
Qualifying Events for Employees are:
Termination of employment, other than for gross
misconduct;
Reduction in hours;
Notifying the employer that the employee will not
return to work from a Family and Medical Leave Act leave
of absence.
Qualifying Events for Spouses are:
Termination of the covered employee's employment,
other than for gross misconduct;
Reduction in the hours worked by the covered
employee;
Death of the covered employee;
Divorce or legal separation from the covered
employee;
Covered employee's voluntary termination of group
coverage due to enrollment in Medicare.
Qualifying Events for Dependent Children are:
The same as for the spouse, plus
Loss of dependent child status due to reaching the
maximum age for coverage, marriage, or completion of
schooling.
NOTE: If you are covered by another
group health plan or Medicare at the time of the
qualifying event, COBRA must still be offered. Coverage
under Medicare or other group health plans does not
preclude you from electing COBRA coverage in addition to
the other coverage. (Effective January 1, 2000)
What Are The Notification Deadlines?
An employer must notify the plan administrator within 30
days after an employee's death, termination, reduction
in hours of employment or entitlement to Medicare.
You must notify the plan administrator within 60 days
after events such as divorce or legal separation or a
child's ceasing to be covered as a dependent under the
policy.
The plan administrator must notify you and your family
members of your right to COBRA coverage within 14 days
after receiving information that a qualifying event has
occurred.
You must notify the plan administrator of your election
of COBRA coverage within 60 days after the qualifying
event or after the date the notice to elect COBRA
coverage is sent, whichever is later.
How Much Will COBRA Continuation Coverage Cost?
You must pay the entire premium for the coverage,
including the part that was formerly paid by the
employer. There may be a 2% administration fee added to
the premium. If coverage is extended for an additional
11 months due to a disabling condition, the premium may
be up to 150% of the applicable non-COBRA premium for
months 19 through 29.
What Benefits Are Available With COBRA?
The benefits provided under COBRA coverage must be the
same as under the group plan. However, if you were
covered by a region-specific plan, such as an HMO, and
move from the service area, the HMO coverage may no
longer be available. If your employer offers other
coverage options that can be extended to the new area,
those options must be made available to you.
How Long Does COBRA Continuation Last?
COBRA establishes a minimum period of coverage for
continuation of health benefits. A health plan may
provide longer periods of coverage beyond those required
by COBRA. Under COBRA, an individual may be entitled to
up to 18 months, 29 months, or 36 months of continuation
coverage depending upon which qualifying event(s)
triggered the COBRA coverage. The following table
illustrates the maximum coverage periods for each
qualifying event. Remember that an event is a qualifying
event only if it causes the qualified beneficiary to
lose coverage under the plan.
|
Qualifying Event |
Who May Elect COBRA |
Maximum Coverage Period |
|
Termination of Employment or reduction of hours |
Employee and/or covered dependents |
18 months |
|
Disability of employee or covered family member
at time of COBRA election or within 60 days
after election |
Employee and/or covered dependents |
29 months |
|
Divorce or legal separation |
Spouse and/or dependent children |
36 months |
|
Death of employee |
Spouse and/or dependent children |
36 months |
|
Entitlement to Medicare by covered employee
before a qualifying event |
Spouse and/or dependent children |
36 months after date of
entitlement to Medicare OR
18 months (29 months if there is a disability
extension) after the covered employee's
employment terminates or his hours are reduced. |
|
Loss of dependent child status |
Dependent child |
36 months |
(Note: While on COBRA, you may experience a subsequent
qualifying event that may entitle you to an extension of
your COBRA coverage. If you believe this has occurred,
please contact the employer for more information.)
COBRA coverage can be terminated when:
You reach the last day of maximum coverage;
You fail to make timely premium payments;
The employer ceases to maintain a group health plan;
You obtain coverage with another employer group
health plan and have satisfied any waiting periods for
preexisting conditions under the new plan;
You become entitled to Medicare after COBRA was
elected.
NOTE: If you are already
covered by Medicare or another group health
plan, you can elect COBRA coverage in addition to the
other coverage. However, if you obtain Medicare or other
group health coverage after the
election of COBRA, the COBRA coverage will be
terminated.
Be aware, there may be consequences if you waive
Medicare Part B when you are first eligible for Medicare
believing you can enroll in Medicare Part B when your
COBRA coverage ends. If you waive Medicare Part B when
you are first eligible for Medicare, you may not enroll
in Medicare Part B until an open enrollment period (each
January through March) and coverage will not be
effective until the following July 1 st and you will be
charged a 10% surcharge for each year of delayed
enrollment for as long as you have Medicare Part B. If
your COBRA coverage expires in March, for example, you
will not be able to enroll in Medicare Part B until the
following January and coverage will not be effective
until July 1 of the next year. Please contact our Senior
Health Insurance Program at (800) 548-9034 prior to
making any decisions regarding your Medicare Coverage.
What Happens When My COBRA Ends?
You or your dependents may be eligible
to convert coverage to an individual policy at any time
during the continuation period or at the end of the
period, except when the continuing person becomes
eligible for Medicare. Check your policy to find out if
a conversion policy is offered.
You may also want to shop around for an individual
policy on your own. You may be able to find better
coverage at a more affordable rate. An insurance broker
in your area can assist you in applying for individual
coverage.
If you or your dependents have a
medical condition that precludes the purchase of
individual coverage, the HIPAA CHIP plan offered by the
Illinois Comprehensive Health Insurance Plan may be an
option when the continuation policy expires. This plan
provides coverage for individuals with an uninsurable
health condition, without preexisting condition
exclusions or limitations, if there has not been a break
in coverage of more than 90 days. We encourage you to
apply for the HIPAA CHIP plan at least two months prior
to your COBRA coverage expiration in order to allow
ample time for the application to be processed. For an
application and information, you should contact the
Illinois Comprehensive Health Insurance Plan (ICHIP) at
(866) 851-2751 or
http://www.chip.state.il.us.
NOTE: If you have a medical condition that
renders you uninsurable and you elect a conversion
policy rather than HIPAA CHIP, you will lose your rights
to elect HIPAA CHIP. If you elect the
conversion policy and then decide, for whatever reason,
to drop it, you will not be eligible for the HIPAA CHIP
plan. You will have to apply for coverage with the
regular CHIP plan, which may have a waiting list and
does not pay for preexisting conditions for the first
six months of coverage.
The Internal Revenue Service
website, www.irs.gov, includes information about the 65%
Health Coverage Tax Credit (HCTC) for trade-displaced
workers and certain individuals receiving pension
benefit payment from the Pension Benefit Guaranty
Corporation (PBGC). The website information explains who
is eligible for the HCTC and how it may be claimed.
Information is also available on the ICHIP website,
http://www.chip.state.il.us.
For More Information On COBRA
Call our Consumer Services Section at (312) 814-2427 or
our Office of Consumer Health Insurance toll free at
(877) 527-9431 or
visit us on our website at
www.idfpr.com; or
Contact the US Department of Labor
at (866) 444-3272:
http://www.dol.gov/ebsa
Related Topics :
Health Insurance Continuation
Rights -- Illinois Law
Health Insurance Continuation
Rights -- Illinois Spousal Law
Health Insurance Continuation
Rights Illinois Dependent Child Law
|
|
COBRA |
Illinois
Continuation |
Illinois
Spousal Continuation |
Dependent
Continuation
Effective July 1, 2004 |
|
Applicability |
Applies to
employer groups with 20 or more employees. |
Applies to employer groups of any size. Applies
to insurance companies and HMOs. |
Applies to
employer groups of any size.
Applies to
insurance companies.
Effective Jan 1,
2004 applies to HMOs. |
Applies to
employer groups of any size. Applies to
insurance companies and HMOs. |
|
Who Is
Eligible |
Employees
and/or covered dependents. |
Employees and
covered dependents. |
Divorced or
widowed spouses (any age) and covered dependent
children. Spouses (age 55 or older) of retired
employees, and covered dependents. |
Covered
dependent children of deceased employee, who are
not otherwise covered under the Spousal
Continuation Law.
Covered
dependent children who attain the limiting age
under the insurance policy or HMO certificate.
|
|
Coverage
Requirements |
Must be
covered by the group plan on the day prior to
the qualifying event. |
Employees
must be covered for 3 continuous months before
qualifying event. |
Spouse and
dependents must be covered on the day prior to
the qualifying event. |
Dependent
child must be covered on the day prior to the
qualifying event. |
|
Qualifying
Events |
Must be
offered to employee & covered dependents upon:
1.
Termination of
employment;
2.
Employee's retirement;
3.
Reduction in
employee's hours.
Must be
offered to spouse, former spouse & covered
dependents upon:
1.
Employee's eligibility for Medicare;
2.
Divorce or legal separation from employee;
3.
Death
of employee;
4.
Loss
of dependent child status under plan. |
Must be
offered upon termination of employment or
membership unless termination is due to theft or
commission of work-related felony.
Must be
offered to an employee whose insurance is
terminated due to a reduction in hours worked.
(Effective January 1, 2004) |
Must be
offered to divorced spouse or widowed spouse and
dependent children upon divorce from or death of
employee.
Must be
offered to spouse (age 55 or older) and
dependent children of retiree upon employee's
retirement. |
Must be
offered to dependent child after death of
insured if coverage is not available under the
Spousal Continuation Law.
Must be
offered to dependent child upon attainment of
limiting age under the insurance policy or HMO
certificate. |
Comparison of Laws Pertaining to Continuation of
Health Benefits
This is a general comparison. For Specific
Information regarding each continuation law, please
refer to the specific Fact Sheet.
|
|
COBRA |
Illinois
Continuation |
Illinois
Spousal Continuation |
Dependent
Continuation
Effective July 1, 2004 |
|
Benefits |
Coverage must
be the same as under the group plan. |
Coverage must
be the same as under the group plan but need not
include extra benefits such as dental, vision or
prescription drugs.
|
Coverage must
be the same as under the group plan. |
Coverage must
be the same as under the group plan. |
|
Length of
Continuation Coverage |
Loss of employment
or reduced hours
for
employee & covered dependents, maximum of 18
months. May be extended to 29 months if
disabled.
Divorce or legal
separation from employee, death of employee or
employee entitled to Medicare
maximum of 36 months for spouse, former spouse
and dependent children.
Loss of dependent
child status-
maximum of 36
months.
|
Coverage is
provided for a maximum of 9 months. |
Spouse under age 55
Divorced or widowed spouse (not spouse of
retiree) and dependent children
Coverage is
provided for maximum of 2 years.
Spouse age 55 or
older Divorced or widowed spouse or spouse of
retiree and dependent children
coverage is
provided until spouse is eligible for Medicare.
|
Coverage is
provided for a maximum of 2 years.
|
|
Premiums |
Premium may
not exceed 102% of group rate.
Plan may
charge 150% after 18 months if the 11-month
extension for disability is granted. |
Premiums may
not exceed the group rate. |
Spouse under age 55
Divorced or widowed spouse premium may not
exceed the group rate.
Spouse age 55 or
older
Divorced or widowed spouse or spouse of
retiree, administration fee may be added to
group rate after first two years of coverage. |
Premiums
shall not exceed:
the amount
that would be charged to an employee if the
dependent child was an employee
PLUS
the amount
the employer would contribute toward the premium
if the dependent child were an employee. |
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