Cobra insurance and Cobra Qualifying Event?

Submitted by RSOC on Thu, 01/10/2008 - 19:39

Is it a COBRA “qualifying event” if you are a part-time employee, and your employer increases the minimum number of hours to receive group health insurance?

Also, if your employer's plan is self-funded, how is the premium calculated?

Posted: 12 Jan 2008 12:53 Post Subject:

Is it a COBRA “qualifying event” if you are a part-time employee, and your employer increases the minimum number of hours to receive group health insurance?

I think that your questions is kind of backwards. Normally, part-time employees are not offered benefits; typically only full-time employees are eligible for benefits at work.

So, did you mean the opposite? You WERE full time and receiving benefits, and now your hours have been cut-back so that you are NO LONGER a full-time employee? And now, as a part-time employee, you are NO LONGER eligible for benefits and therefore, are you COBRA eligible?

If that's the case, I would suggest that YES, you would be eligible for the basic COBRA continuation period of 18 months. Qualifying events for COBRA continuation (for the 18-month extension period) are:
1. Terminated/quit for OTHER than gross misconduct
2. Laid-off
3. Reduction in hours worked and no longer considered full-time.

Is this what you are getting at? If so...there's your answer! Keep in mind that most states have their own iterations of continuation, commonly referred to as "Mini-Cobra." If you hear that term, that is your state's take on COBRA. Your state may have altered the federal definitions under COBRA, but if so, it would only be on a minor basis and normally will not affect the average person detrimentally.

Also, if your employer's plan is self-funded, how is the premium calculated?

Here, are you referring to "self-insured" plans or the fact that your employer is paying the full insurance premium on your behalf? If it's a true self-insured plan, there is no COBRA. Self-insured plans are subject to federal ERISA law. Another story there. If you are referring to the idea that your employer paid your full insurance premium, and what's it now going to cost you now that you have to pay for it- here's the deal: You will have to pay 100% of whatever the employer was paying on your behalf, PLUS up to an additional 2% for adminitration. The resultant premium is normally "102% of the group premium rate for the insured person and their enrolled depedents."

"Sticker Shock" are the normally associated words here.
Let us know if there's anything else!

InsTeacher 8)

Posted: 12 Jan 2008 12:56 Post Subject:

Wait a sec...I think I just figured this out...

You WERE covered as a full-time employee, and now your employer has increased the number of required hours you have to work to NOW be considered a full-time employee? So, you DID qualify under the "old" rules, but due to the employer increase, you DON'T qualify now?

Same ARE eligible for COBRA.

Is this right?

InsTeacher 8)

Posted: 14 Jan 2008 07:48 Post Subject: Clarification

No, I am a part-time employee working 24 hours per week, and I do qualify for and receive group health insurance. However, in March my employer will require employees to work 30 hours per week to be eligible for health coverage. If I continue working 24 hours, I'm wondering if I will qualify for COBRA continuation coverage.

By self-funded I do mean self-insured. Can you provide a link or reference to an authoritative source that self-insured plans are not subject to Cobra? I believe you may be mistaken on that point.

From "An Employee's Guide to Health Benefits Under COBRA" published by the United States Department of Labor - Employee Benefits Security Administration: "Under COBRA, a group health plan is any arrangement that an employer establishes or maintains to provide employees or their
families with medical care, whether it is provided through insurance,
by a health maintenance organization, out of the employer's assets on
a pay-as-you-go basis, or otherwise."

I'm not sure what is the relevance of a self-funded plan being covered by ERISA. ALL health plans, whether self-funded or insured, are subject to ERISA. The difference is that self-funded plans are covered ONLY by ERISA, and are exempt from state regulations, which are generally more stringent than ERISA. However, COBRA is a part of ERISA. (Another reference from the same publication: "Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions in 1986. The law amends the Employee Retirement Income Security Act (ERISA)") In other words, it is by virtue of the fact that a plan is covered by ERISA that it is subject to the provisions of COBRA. Therefore a self-funded plan being subject to ERISA doesn't explain to me why it would not be subject to COBRA.

Not trying to belabor the point, just trying to provide thorough references for my assumptions. If anyone has any authoritative sources that contradict, please share them.

So assuming the eligibility issue is settled, my question remains: How is the COBRA premium calculated for self-funded plans?

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