2. COBRA Basics
What is COBRA?
COBRA stands for Consolidated Omnibus
Budget Reconciliation Act (COBRA) of 1986.
COBRA applies to employers with 20 or more
employees.
COBRA provides certain former employees,
retirees, spouses, former spouses, and
dependent children the right to temporary
continuation of health coverage at group
rates. This coverage, however, is only
available when coverage is lost due to certain
specific events.
3. COBRA Basics
Who is eligible for COBRA?
Qualified Beneficiaries - An individual
covered by a group health plan on the day
before a qualifying event who is an employee,
the employee's spouse or dependent child.
In certain cases, a retired employee, the
retired employee's spouse, and the retired
employee's dependent children may be
qualified beneficiaries.
Any child born to or placed for adoption with a
covered employee during the period of COBRA
coverage is considered a qualified beneficiary.
4. COBRA Basics
COBRA must be offered if there is a
qualifying event. A qualifying event for an
employee is:
Voluntary or involuntary termination of
employment for reasons other than gross
misconduct.
Termination of employer contribution
(reduction of the employer contribution does
not qualify).
A voluntary cancellation of coverage does not
qualify for COBRA continuation.
5. COBRA Basics
Qualifying events for dependents are:
The voluntary or involuntary termination of the
covered employee's employment for any
reason other than gross misconduct
Loss of employer contribution (reduction in the
contribution does not qualify)
Divorce or legal separation of the covered
employee
Death of the covered employee
Loss of dependent child status
Voluntary cancellation of coverage does not
qualify.
6. COBRA Basics
What are the notification requirements for
COBRA?
Employees must be notified of their COBRA
rights within 90 days of the coverage effective
date. This requirement is met by way of the
notice located in Section B of the It’s Your
Choice booklet.
Plan participants and beneficiaries must be
sent an election notice not later than 14 days
after the plan administrator (the employer)
receives notice that a qualifying event has
occurred.
7. COBRA Basics
The individual then has 60 days to decide whether
to elect COBRA continuation coverage.
If the individual initially declines to continue
coverage, he or she may change his or her mind
within the 60-day election period.
The person has 45 days after electing coverage to
pay the initial premium.
Each covered individual has an independent right
to elect continuation (if there are only two individuals
electing continuation, two single plans will be less
expensive than one family plan).
8. COBRA Basics
When the employer does not know about the
qualifying event:
A qualified beneficiary must notify the campus
benefits office of a qualifying event within 60
days after divorce or legal separation or a child's
ceasing to be eligible as a dependent under plan
rules.
Failure to do so will result in the dependent’s loss
of eligibility for COBRA continuation.
Dependents must be notified of COBRA rights
even if they are not eligible.
Important Notes: Under State law, coverage for an ex-spouse
remains in force until the ex-spouse is notified of the continuation
rights, provided family premiums continue to be paid. Coverage
for the ex-spouse (and any step-children) ends at the end of the
month in which the employer is notified of the event.
Employees should not terminate family coverage in anticipation of
a divorce as the employee may be liable for medical expenses
incurred by the spouse.
9. COBRA Basics
Important Notes: Under State law, coverage
for an ex-spouse remains in force until the
ex-spouse is notified of the continuation
rights, provided family premiums continue to
be paid. Coverage for the ex-spouse (and
any step-children) ends at the end of the
month in which the employer is notified of
the event.
Employees should not terminate family
coverage in anticipation of a divorce as the
employee may be liable for medical expenses
incurred by the spouse.
10. COBRA Basics
There is no change in premium when continuing
coverage - but there is no employer contribution.
(Under COBRA, the employer may charge up to 102% of
the active employer premium, but the State does not
charge the additional 2%.)
A qualified beneficiary electing to continue
coverage will remain in the same health plan.
There can be no lapse of coverage, so all back
premiums must be paid.
Individuals on continuation have all of the same
rights as active members. They also may change
plans annually during Dual-Choice.
11. COBRA Basics
If a dependent child does not live in the same
county as the employee, he or she may select a
different health plan at the time he or she elects
to continue coverage.
If an individual moves while on continuation, he
or she may select a different health plan by
notifying ETF within 30 days of the move.
If a graduate assistant accepts a permanent WRS
position, he may continue the graduate assistant
coverage until the employer contribution begins in
the new appointment. If the position is
unclassified, the employer contribution begins on
the first of the month after the application is
submitted. As such, no continuation will be
offered.
12. COBRA Basics
How long does COBRA coverage continue?
Federal law requires that the former employee
be allowed to continue coverage for 18
months. Under the State Group Health
program, however, all qualified beneficiaries
may continue coverage for up to 36 months.
Because the employer contribution is paid two
months in advance, qualified beneficiaries
actually have an additional 34 months of
continuation available.
36 months – the two months premium is
paid in advance = 34 months remaining
under COBRA.
13. COBRA Basics
Under what circumstances might COBRA
coverage end before the end of the 36-
month period?
If premiums are not paid on a timely basis
After the COBRA election, coverage is obtained
with another employer group health plan that
does not contain any exclusion or limitation
with respect to any pre-existing condition of
such beneficiary.
The employer ceases to maintain any group
health plan.
14. COBRA Basics
What is conversion?
At the end of COBRA coverage, the participant must
be given the option of converting to an individual
policy.
The health plan must provide notice of the option to
enroll in a conversion health plan within 180 days
before COBRA coverage ends.
The premium for a conversion policy will be more
expensive than the premium of a group plan, and
the conversion policy may provide a lower level of
coverage.
The conversion option, however, is not available if
the beneficiary ends COBRA coverage before
reaching the end of the maximum period of COBRA
coverage.
15. COBRA Basics
Does the employee get COBRA benefits while
on FMLA leave?
The Family and Medical Leave Act requires an
employer to maintain group health coverage for an
employee on FMLA leave just as it would have
provided if the employee had continued working.
Coverage provided under the FMLA is not COBRA
coverage, and FMLA leave is not a qualifying event
under COBRA.
A COBRA qualifying event may occur, however, when
an employer's obligation to maintain health benefits
under FMLA ceases, such as when an employee
notifies an employer of his or her intent not to return
to work.
16. COBRA Basics
In addition to COBRA, there is also
state continuation (S. 632.897, Wis.
Stats). Under state continuation, the
member must be covered for three
months before the qualifying event.
The state provides for 18 months of
continuation. This runs concurrently
with COBRA, if both apply.
17. COBRA Basics
COBRA and state continuation under s.
632.897, Wis. Stats., do not apply to life
insurance plans.
Group life insurance plans may offer
continuation, but must offer conversion
under s. 632.57, Wis. Stats.
18. COBRA Basics
Which benefit programs require COBRA notices?
Health Insurance – ET-2311 (rev. 4/05)
May continue coverage for up to 36 months
Epic – E11472
Must be covered for 3 months
May continue coverage for up to 36 months
Retirees have own plan so not limited to 36 months
Dental* – UWS-8 or OSER-DCLR-216 (12/05)
May continue coverage for up 18 months if the employee
terminates employment.
May continue coverage for up 36 months if the dependent
loses eligibility or employee dies.
Retirees may continue indefinitely
AD&D* – UW1249 (at retirement only)
UIA – F.UW1443
ERA - ET-1518
*Domestic Partners are eligible for continuation
19. COBRA Basics
Which plans offer only conversion to an
individual plan?
State Group Life+
Individual and Family Life*
UW Employees, Inc.*
AD&D (except at retirement)*
+Eligible employees may continue coverage, although
coverage is reduced per plan provisions.
*Domestic Partners are eligible for conversion
Note: These plans are not subject to COBRA.
