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The following are the rules regarding the requirements that employers offer terminating employees the opportunity to continue medical insurance. These are mandated by federal legislation, and binding on all employers.
The employee should be made aware of his or her rights and a form of election signed, or a release form indicating that the employee was made aware of the option.
Duration of Benefits
18 months unless due to death, divorce, or Medicare loss, in which case it can be elected for 36 months. If the qualified beneficiary is disabled, as determined by Social Security, the 18 months is extended to 29 months.
Benefits which must be Provided
Core benefits only: Dental*, disability, and vision care are not considered core benefits.
Payment for Medical Insurance Extension
Employee cost: Total amount of monthly premium plus 2% that the employer can retain to cover administration costs.
Termination of Benefits
- 18 months expires (or 29 months if disabled)
- tthe beneficiary fails to make timely payments to the plan
- employer ceases to maintain any group health plans for his employees
- the beneficiary is covered by another group plan
- the beneficiary is entitled to Medicare benefits
Employer Penalties
- the employer will not be permitted to deduct contributions made to any group health plan
- penalty of $100 per day, $110 under ERISA
- the highly compensated must include any employer contribution to his plan as compensation
Notification Requirements
- the employer must notify the plan administrator within 30 days of an event
- employee must notify plan administrator within 60 days of a qualifying event
- the plan administrator must notify the employee within 14 days of the employee’s right to elect continuation of group health coverages
- a qualified beneficiary has 60 days in which to elect the continuation.
* Although dental insurance does not fall under the COBRA laws, which are federal laws, dental insurance is considered “medical insurance” according to law and thus must be continued if so chosen.
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