Jones Insurance Agency, Inc.

Information about COBRA and State Continuation

DEPARTING EMPLOYEES:

The issue of continuation of coverage for terminated employees is very complex. All groups fall under one of two continuation options - COBRA or State Continuation. It is important to know which option applies to your group in order to follow the proper guidelines for compliance and to avoid liabilities.

20+ EMPLOYEES:
The Consolidated Omnibus Budget Reconciliation Act of 1985, otherwise known as COBRA, requires employers to offer qualified beneficiaries, under certain criteria, the option to continue participation in group health insurance benefits.

  1. Employers with 20 or more full- and/or part-time employees in the prior calendar year are subject to this legislation. (Full- and/or part-time usually constitutes 20 or more hours worked per week.)
  2. Initial COBRA notification must be given to all eligible employees and dependents.
  3. For those covered on the day before the qualifying event, notice must be given within 14 days of termination or the qualifying event. This is best done by proof of mailing. The qualified beneficiary then has 60 days to decide if he/she wants to continue coverage. In most cases, COBRA coverage is for a period of 18 months but may be extended in certain circumstances.

UNDER 20 EMPLOYEES:
The continuation requirement for small employers is often referred to as State Continuation.

  1. In North Carolina, employers with fewer than 20 full- and/or part-time employees are subject to this state legislation.
  2. Under certain conditions, a qualified beneficiary may continue group health benefits for up to 18 months following a termination or a triggering event.

Both of these continuation options require the former employee to pay the full cost of monthly premiums.

NEW EMPLOYEES:

It is extremely important to offer coverage to all new full-time employees within your company's waiting period, at which time you may inform them of their COBRA or State Continuation rights. This can help prevent pre-existing exclusions and/or denial of coverage.

If you have any questions about your compliance or have issues you would like to discuss, please call us.

The Trusted Choice
Keystone Insurers Group Jones Insurance Agency, Inc.
820 Benson Rd. P. O. Box 407 Garner, North Carolina 27529
Phone: (919) 772-0233
Fax: (919) 779-4025
Toll Free: (800) 222-2043