Continuation of Coverage (COBRA)

The following are Anthem’s responses to questions and answers frequently asked about COBRA. This is not intended to be a compliance guide, and should not be construed as legal advice. Anthem advises Plan Sponsors to check with their legal counsel on specific legal issues involving COBRA.

Q: What are an employer’s COBRA compliance requirements with respect to group health plans?

A: Generally, COBRA applies to all employers that offer employee group health plan coverage and that employ 20 or more employees on 50% of the business days in the preceding calendar year.

Federal, state and local government and church plans are not required to comply with the COBRA Regulation. However, there are similar provisions contained in the Public Health Service Act (PHSA) that may apply.

Q:   Who is a Qualified Beneficiary?

A:  A Qualified Beneficiary generally is (1) any individual who, on the day before the Qualifying Event, is covered under a group health plan either as a covered employee, the spouse of a covered employee, or the dependent child of a covered employee, or (2) any child born to or placed for adoption with a covered employee during a period of COBRA continuation coverage; or (3) for a Qualifying Event of bankruptcy of the employer, any covered employee who retired on or before the date of any substantial elimination of group health coverage, including the spouse, surviving spouse or dependent child if they were covered as a dependent under the plan on the day before the bankruptcy Qualifying Event.
 

Q:  Who is NOT a Qualified Beneficiary?

A:  The following are NOT considered Qualified Beneficiaries for purposes of COBRA (1) a person (other than a newborn or newly adopted child) who was not covered on the day before the Qualifying Event; (2) a person who marries a covered employee during a COBRA period; (3) a child born to or newly adopted by Qualified Beneficiaries who are not covered employees; (4) a person who has been enrolled as the dependent of a Qualified Beneficiary, but who is not a Qualified Beneficiary; or (5) a Qualified Beneficiary who does not elect COBRA by the end of the COBRA election period ceases to be a Qualified Beneficiary at the end of the COBRA election period.
 

Q:  What is a Qualifying Event?

A:  A Qualifying Event is one of the following events which causes the person to lose coverage:

• Death of a covered employee;
• Termination (other than by reason of gross misconduct) or reduction in hours of a covered employee;
  Note: The employer must inform Anthem in writing when termination has occurred due to “gross misconduct”.
• Divorce or legal separation of a covered employee and his/her spouse;
• A covered employee becoming entitled to Medicare;
• A dependent child ceases to be a dependent child under the terms of the plan; or
• Bankruptcy of the employer (with respect to certain retirees).

A person is considered to “lose coverage” if the person ceases to be covered under the same terms and conditions as before the event. Under the final regulations this also means an increase in an employee contribution resulting from one of the enumerated Qualifying Events.

If a covered employee discontinues the coverage of a spouse in anticipation of a divorce or legal separation, upon receiving notice of the divorce or legal separation, the plan is required to offer the spouse the opportunity to obtain COBRA continuation coverage, effective as of (but not before) the date of the divorce or legal separation.
 

Q:  If Anthem performs COBRA administration for the plan, how does the employer notify Anthem that a Qualifying Event has occurred and how much time does the employer have to notify Anthem?

A:  The employer must submit an Enrollment/Change Form to Anthem notifying Anthem that a Qualifying Event has occurred. Anthem should be notified by the employer as soon as possible after the Qualifying Event but no later than 30 days after the date of the Qualifying Event: (1) the employer is notified of the Qualifying Event by the Qualified Beneficiary; or (2) the employer becomes aware of the Qualifying Event—whichever is the earlier to occur. If the employer does not timely notify Anthem that a Qualifying Event has occurred, this may extend the period of time in which the Qualified Beneficiary has in which to elect coverage.
 

Q:  Does Anthem provide the “initial notice” to new plan participants as part of its COBRA administrative services?

A:  The first or “general” notice regarding COBRA rights is to be provided by the employer.
 

Q.  To whom must an initial COBRA notice be provided and how is it to be provided?

A:  The employer is responsible for providing an initial notice under the following circumstances:

• When the group health plan first becomes subject to COBRA;
• when new employees are hired; or when employees add spouses.
• The notice may be hand delivered or sent by the employer to the last known mailing address of the employee.
• A separate notice must be hand delivered or mailed to the employee’s spouse at his or her last known mailing address. First class mailing is sufficient to satisfy the requirement. Posting of a COBRA notice in a common area such as a bulletin board or newsletter is not sufficient to meet the requirement.

Q:  What is COBRA coverage and for which benefits does Anthem administer COBRA coverage?

A:  COBRA beneficiaries in a group health plan must be provided with the same coverage made available to similarly situated non-COBRA beneficiaries. In general, that means the coverage the COBRA beneficiary had in effect on the day before the Qualifying Event. If an employer plan performs its own COBRA administration and has contracted with a company for prescription drug card services, the employer is responsible for notifying the prescription drug card company of the Qualifying Event.

If Anthem provides COBRA services for a Plan, Anthem will notify the prescription drug card company weekly of COBRA coverage elections, payments received, changes to coverage, and terminations.

For any other outside vendors and coverages, please check with those companies for more information.
 

Q:  How does Anthem notify a potential Qualifying Beneficiary of their rights and obligations under COBRA for those plans that have contracted with Anthem to provide COBRA administration services?

A:  Upon receipt of a completed Enrollment/Change Form from the employer, Anthem sends notice of COBRA election rights by first class mail to the last known address of the principal Qualified Beneficiary and/or individual family members (unless Anthem is notified that one of these family members resides at a different address). The notice is a notification of the person’s rights under the COBRA law to elect to continue coverage under the plan.

Anthem typically sends out the Enrollment/Change Form within four (4) or five (5) days from receipt of the completed Enrollment/Change Form from the employer. If this form is incomplete, it will delay the notification process.
 

Q:  What is the maximum election period under COBRA?

A:  The Qualified Beneficiary must elect coverage within 60 days from the later of, (1) the date that the Qualified Beneficiary would otherwise lose coverage on account of the Qualifying Event; or (2) the date that the Qualified Beneficiary is sent notice of his/her rights to elect COBRA continuation coverage.
 

Q:  If a Qualified Beneficiary waives coverage under COBRA, can they subsequently change their mind and elect COBRA coverage? 

A:  A Qualified Beneficiary who waives COBRA continuation coverage during the election period can revoke the waiver before the end of the election period, but coverage will not be provided retroactively. Coverage under the plan will only be provided from the date of the revocation of the waiver forward. The revocation of the waiver will be considered made on the date that it was sent to the employer and/or plan administrator.
 

Q:  What happens to claims submitted to Anthem within the election period? 

A:  Coverage is terminated under the Plan until such time that the Qualified Beneficiary properly elects COBRA coverage and makes the applicable premium payment. During the period of time when coverage terminates and when Qualified Beneficiary has properly elected coverage and made payment for COBRA coverage, Anthem will inform any party or person who contacts Anthem that the Qualified Beneficiary does not have coverage but that coverage may be retroactively reinstated if the Qualified Beneficiary elects COBRA within the election period and makes payment of the applicable premium.
 

Q:  What happens to claims for prescription drugs? 

A:  Coverage is terminated under the Plan until such time that the Qualified Beneficiary properly elects COBRA coverage and makes the applicable premium payment. If you have paid for a claim incurred after your Qualifying Event date, you can submit your receipt for reimbursement once you have returned your signed election form and paid all premiums due through the present date in a timely manner.

Once you have elected and paid for COBRA, claims will only be processed through the date your coverage is paid.
 

Q:  For how long may the Qualified Beneficiary be on COBRA continuation coverage? 

A:  Depending on the circumstances of the Qualifying Event, COBRA coverage may be available for 18, 29 or 36 months. In some instances, some Retirees and their surviving spouse may have lifetime coverage. There are also events that are considered secondary events that can give rise to extended COBRA coverage, please check with the Anthem COBRA Department for additional information.
 

Q:  How much does the Plan charge Qualified Beneficiaries for COBRA coverage and how are premiums for this coverage determined? 

A: On an annual basis, Anthem provides an estimate to the employer of COBRA rates for the upcoming 12-month period. It is the employer’s responsibility to inform Anthem before the 12-month determination period what COBRA rate it intends to use. The employer, at its option can choose to calculate these rates and provide them to Anthem, but Anthem recommends that you consult with your legal counsel on this matter. Unless the employer notifies Anthem that there is a change in the COBRA rates, it will continue to use those rates previously provided.
 

Q:  Can the employer change COBRA premiums during the 12-month determination period? 

A:  By in large, after the employer determines COBRA premiums for the 12 month period, the rates cannot be changed, except under specified conditions set forth in the COBRA regulations.
 

Q:  In some instances where Anthem provides COBRA administrative services for a plan, does Anthem accept COBRA premium payments? If yes, from whom?  

A:  Anthem informs Qualified Beneficiaries that if they elect to become covered under the continuation provisions, they must make their COBRA premium payment payable to the employer but send the payment to Anthem. This is to ensure that proper credit for coverage is given to the Qualified Beneficiary. After receiving and crediting the payment, Anthem forwards all premium payments to the employer. Under the new regulations a plan is required to accept COBRA premium payments from the Qualified Beneficiary or, in many cases, any other third party.
 

Q:  May a Qualified Beneficiary add a person as a dependent as a result of marriage or birth while covered under COBRA continuation coverage? 

A: In general, if similarly situated non-COBRA beneficiaries are allowed to add such dependent, so too can COBRA participants. These dependents may not however be deemed “Qualified Beneficiaries” under COBRA in some circumstances.
 

Q:  Previously we were required to allow COBRA participants to select different types of coverage under our plan, e.g., medical or dental or vision, when we did not allow our active employees the same option – is that what is meant by core and non-core coverage?

A:  Group health plans are no longer required to offer Qualified Beneficiaries under COBRA, the option to elect core coverage under a group health plan that otherwise provides both core and non-core coverage. For purposes of COBRA, Qualified Beneficiaries are entitled to elect the types of coverage specified in the COBRA section of the plan.
 

Q: What does it mean to provide “alternate coverage” and why is it important? 

A:  Many employers and their plans continue coverage under the plan for reasons separate from COBRA. These situations are referred to as “alternate coverage”. Alternate coverage can be coverage provided pursuant to:

1. State or local law;
2. Collective bargaining agreement;
3. Severance agreement;
4. Retirement agreement; or
5. Procedure or provision contained in the plan itself.

If the alternate coverage (as described above) does not satisfy all the requirements of COBRA or the amount that the group health plan requires be paid for the alternate coverage is more than the amount required to be paid by similarly situated non-COBRA beneficiaries for the coverage that the Qualified Beneficiary can elect to receive as COBRA coverage, then the plan covering the Qualified Beneficiary immediately prior to the Qualifying Event must offer the Qualified Beneficiary receiving the alternate coverage the opportunity to elect COBRA.

If however, the Qualified Beneficiary rejects COBRA in favor of the alternate coverage, then at the expiration of the alternative coverage, the Qualified Beneficiary need not be offered COBRA. It is important that the language of the plan address any alternate coverage you have available. Please contact your Anthem Contract Analyst if you have questions on your Plan’s language.
 

Q:  If I elect COBRA coverage, how can I find out my rate and verify receipt of my payment?

A:  For employers that have contracted with Anthem to administer their COBRA, a rate verification form listing all the rates for the applicable group you are being offered COBRA through and twelve monthly payment coupons are included in the original cobra election packet sent to you. If you wish to verify receipt of COBRA payment or have any questions on COBRA, you may contact the Anthem COBRA Dept. At (920) 496-1157 or 1-800-472-7130.