Understanding COBRA Continuation CoverageHotel Voice - August 5, 2015
As most of you know, Hotel Trades Council members and their eligible family members are able to continue their health coverage through a group plan in the event they have lost their regular employer-sponsored coverage. The plan is called COBRA, a shortened form for the Consolidated Omnibus Budget Reconciliation Act, the law that made this program possible.
The following is a brief recap of the COBRA program. Later this year Hotel Voice will provide a more detailed explanation of COBRA. We strongly advise members to keep for reference purposes both that future article and this brief recap of COBRA.
What is COBRA?
If you lose health coverage, you usually have the right to purchase the same coverage for a limited period through COBRA continuation coverage. This federal law gives virtually all employees, their spouses and dependents the ability to continue their same benefits at group rates under most circumstances. Typically, 18 months of self-pay coverage is available to the employee and 36 months is available to dependents. (An 11-month extension is available to employees in the case of total disability.)
If you lose health coverage due to a layoff in a covered position or not working enough hours to earn benefits, you have a right to be notified that COBRA coverage is available. Once notified, you or a dependent can elect to continue the same — or lesser — benefits that you had while you were working. You have 60 days from the date you receive the notice or from the date you lose coverage — whichever is later — to elect COBRA. If you do not respond by then, you will lose your right to continuation coverage.
Spouses and dependents are also entitled to COBRA when they lose coverage. Such cases include divorce or separation from the employee, the death of the employee or a covered child reaching the cut-off age for dependent coverage. During these events, it is your responsibility to notify the COBRA Plan Administrator within 60 days of their occurrence in order to elect COBRA.
COBRA coverage generally ends at the conclusion of the 18 or 36-month continuation period, but can also end earlier in the case of a late payment or non-payment. If COBRA coverage ends for any reason, it cannot be reinstated.
The Cost of COBRA
The Health Benefits Fund’s COBRA rates reflect the average cost of providing benefits to Plan participants. These rates have continued to rise in recent years, but the cost with our Plan remains between 30 and 40 percent of the most comparable coverage with major insurance companies in the New York region.
You should be aware that the first COBRA payment is due 45-days from the date you elect COBRA. However, the first payment must cover all days from the loss of coverage to a point of which the participant is up-to-date on payments.
The Importance of Maintaining Health Coverage
Members should also be aware that not continuing coverage may affect future rights. For example, if you experience more than a 63-day gap in “creditable” health coverage, you may be subject to pre-existing condition exclusions when you enroll with another group health plan. This would not apply if you regain coverage through our Plan.
Things to Remember
Here are some important things to remember about COBRA.
- You have 60 days from the date you lose coverage to elect COBRA. While you can wait the entire 60 days, you may not use the service of the Health Plan until you choose COBRA.
- Once you choose COBRA, you have an additional 45 days to pay. Again, you may not use the plan until your payment is made.
- Each month, you will have a 30-day grace period to make your COBRA payment but you may not receive any services until payment is received.
- You may make your payments by check, money order or credit card.
- You will not receive a reminder of payments due.
As we said earlier, a future edition Hotel Voice will provide a detailed explanation of COBRA. Obviously, there are many details about COBRA continuation coverage and our Health Fund Plan that are not included in this article. Members are urged to read the Summary Plan Descriptions that are available at the Benefit Funds office (305 West 44th Street, fourth floor) and online at Hotelfunds.org. You will also find the federal government booklet “An Employee’s Guide to Health Benefits Under COBRA” at Hotelfunds.org. You may also contact the COBRA Plan Administrator at 212-586-6400.