COBRA – It’s Not A Snake

COBRA isn’t a snake, but it sure can bite you if you aren’t in compliance. COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act. The Act, for most employers, protects an employee’s right to continue group health coverage should the employee experience a “qualifying” event.

As Y2K approaches, new legislation regarding COBRA is right around the corner. Many companies don’t understand the fine print of COBRA (or even the regular print because it is so ambiguous), so maybe now is a good time to brush up on the Act. If your firm has more than twenty employees and offers a group program, the new rules affect you.

A few of the new changes or clarifications that will go into effect on January 1, 2000 are:

Changes in the design or carrier of a medical/dental plan must be offered to Cobra beneficiaries (persons on Cobra continuation).

If a Cobra beneficiary changes his/her place of residence, coverage under Cobra could be lost. If the employer uses a regional insurance provider, not licensed to do business in the state to which the Cobra beneficiary moves, then the employer has no obligation to continue Cobra.

Employees who voluntarily leave, reduce hours or terminate have Cobra continuation rights. In the past some employers interpreted the regulations to mean that loss of coverage had to be involuntary.

Read the linked article for more changes in the Act.

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