Not every employee at your company has health insurance through your plan. Many employees may be on their spouse’s or even, if they’re under 26 years of age, their parents’ plan. Some may have rejected company coverage in favor of buying coverage on the government health care exchange. If the employee loses insurance, though, they may be looking to COBRA coverage.
Who Can Get COBRA Coverage?
Normally, when you lose company-provided health insurance, regardless of whether you are the covered party or the dependent of a covered party, you’re offered COBRA health insurance coverage, as detailed by the U.S. Department of Labor (DOL). This acronym stands for Consolidated Omnibus Budget Reconciliation Act, but it basically means that most people are entitled to continue the company-provided plan at their own expense, plus up to a two percent administration fee. For instance, if the husband’s company provides health insurance for the entire family and the couple divorces, the ex-wife would be allowed to stay on the insurance plan if she’s willing to pay the full cost for herself (qualified children, of course, can stay on parental insurance regardless of their parents’ marital status). COBRA coverage, however, can be expensive and can be extended only 18–36 months depending on circumstances, as the DOL explains.
COBRA isn’t necessarily the only option out there for people who lose coverage. In order to lose health insurance, something must trigger it: A child ages out, a couple gets divorced, or a spouse loses a job. These are examples of qualifying events, which can result in loss of coverage. A qualifying event allows you, the employer, to open up your enrollment doors and allow a person who has lost coverage to sign up to your company’s health plan, according to the DOL. Most people are familiar with qualifying life events such as childbirth (you have 30 days after a new baby is born to add the baby to your plan), but this also exists for a number of other events, as well.
If one of your employees had coverage through a spouse or parent in the past but is about to lose that coverage, your company can open up enrollment for this individual and add him or her to your insurance plan, along with any qualified dependents. The DOL explains that qualified employees have 30 days from the loss of their coverage to ask for coverage in your plan. If the employee fails to enroll during that period, he must wait until the normal open enrollment period for your plan. Additionally, your employee may wish to join one of the government exchanges rather than selecting company-provided health insurance. Again, the employee must join within a specific time frame after the qualifying event or wait until open enrollment.
Making Options Known
Losing health insurance can be terrifying for any employee, and often employees don’t know their rights and what options are available. Make sure that your company has accessible information on qualifying life events, COBRA and open enrollment periods available. If you explicitly communicate the options open to them in these situations ahead of time, whether it’s seeking COBRA coverage or joining your company’s plan if they qualify, then your employees will be prepared if they lose coverage.
Suzanne Lucas spent 10 years in corporate human resources, where she interviewed and hired employees, managed the numbers, and double-checked with the lawyers. Her writings have appeared in Inc. Magazine, CBS MoneyWatch, US News, Readers Digest and other publications. She focuses on helping businesses nurture great employees and helping employees enjoy great careers.