COBRA Letter
STANDARD NOTICE OF EMPLOYEE'S RIGHTS TO CONTINUE GROUP HEALTH COVERAGE
On April 7, 1986, a federal law was
enacted [Public Law 99-272, Title X] requiring that most employers
sponsoring group health plans offer employees and their families
the opportunity for a temporary extension of health coverage
(called "continuation coverage"
at group rates in certain instances where coverage under the plan
would otherwise end. This notice is intended to inform you, in
a summary fashion, of your rights and obligations under the continuation
coverage provision of the new law. Both you and your spouse should
take the time to read this notice carefully.
If you are an employee of [Your Company] Employee Benefit Plan,
you have a right to choose this continuation coverage if you lose
your group health coverage because of a reduction in your hours
of employment or the termination of your employment (for reasons
other than gross misconduct on your part).
If you are the spouse of an employee covered by the [Your Company]
Employee Benefit Plan, you also have the right to choose continuation
coverage for yourself if you lose group health coverage under the
[Your Company] Employee Benefit Plan for any of the following four
reasons:
- The death of your spouse;
- A termination of your spouse's employment (for reasons other than gross misconduct) or a reduction in your spouse's hours of employment;
- Divorce or legal separation from your spouse; or
- Your spouse becomes entitled to Medicare.
In the case of a dependent child of an employee covered by the [Your Company] Employee Benefit Plan, he or she has the right to continuation coverage if group health coverage under the [Your Company] Employee Benefit Plan is lost for any of the following five reasons:
- The death of a parent;
- A termination of a parent's employment (for reasons other than gross misconduct) or reduction in a parent's hours of employment with [Your Company];
- Parent's divorce or legal separation;
- A parent becomes entitled to Medicare; or
- The dependent child ceases to be a "dependent child" under the [Your Company] Employee Benefit Plan. Furthermore, a child born to, or placed for adoption with, the covered employee during the period of continuation coverage may also become covered.
Under the law, the employee or a family member has the responsibility
to inform the Plan Administrator for the [Your Company] Employee
Benefit Plan of a divorce, legal separation, or a child losing dependent
status under the [Your Company] Employee Benefit Plan within 60
days of the date of the event or the date in which coverage would
end under the Plan because of the event, whichever is later.
[Your Company] has the responsibility to notify the Plan Administrator
of the employee's death, termination, reduction in hours of employment
or Medicare entitlement. Similar rights may apply to certain retirees,
spouses, and dependent children if your employer commences a bankruptcy
proceeding and these individuals lose coverage.
When the Plan Administrator is notified that one of these events
has happened, the Plan Administrator will in turn notify you that
you have the right to choose continuation coverage. Under the law,
you have at least 60 days from the date you would lose coverage
because of one of the events described above, or the date notice
of your election rights is sent to you, whichever is later, to inform
the Plan Administrator that you want continuation coverage.
If you do not choose continuation coverage, your group health insurance
coverage will end. Also, if you do not become re-employed within
63 days of your termination of employment, and you have not chosen
continuation coverage, you may lose prior coverage credit toward
pre-existing condition limitation periods when you next become insured.
If you choose continuation coverage, [Your Company] is required
to give you coverage which, as of the time coverage is being provided,
is identical to the coverage provided under the plan to similarly
situated employees or family members. The new law requires that
you be afforded the opportunity to maintain continuation coverage
for 3 years unless you lost group health coverage because of a termination
of employment or reduction in hours. In that case, the required
continuation coverage period is 18 months. This 18 months may be
extended to 36 months if other events (such as a death, divorce,
legal separation, or Medicare entitlement) occur during that 18
month period.
The 18 months may be extended to 29 months for an individual, and
his/her qualified dependents, if the individual is determined to
be disabled (for Social Security disability purposes) at the time
of the qualifying event or at any time during the first 60 days
of continuation coverage, and the Plan Administrator is notified
of that determination within 60 days. The affected individual must
also notify the Plan Administrator within 30 days of any final determination
that the individual is no longer disabled. In no event will continuation
coverage be continued beyond 3 years from the date of the event
that originally made a qualified beneficiary eligible to elect coverage.
However, the law also provided that your continuation coverage may
be terminated for any of the following five reasons:
- [Your Company] no longer provides group health coverage to any of its employees;
- The premium for your continuation coverage is not paid by you on time;
- You become covered under another group health plan, unless that plan contains any exclusions or limitations with respect to any pre-existing conditions you or your covered dependents may have;
- You become entitled to Medicare;
- You extended coverage for up to 29 months due to your disability and there has been a final determination that you are no longer disabled.
You do not have to show that you are insurable to choose continuation
coverage. However, under the law, you may have to pay all or part
of the premium for your continuation coverage. There is a grace
period of at least 30 days for payment of the regularly scheduled
premium. [The law also says that, at the end of the 18 month or
3 year continuation coverage period, you must be allowed to enroll
in an individual health plan if such conversion is available under
the [Your Company] Employee Benefit Plan.]
This law applies to the [Your Company] Employee Benefit Plan beginning
on May 1, 1987. If you have any questions about the law, please
contact: [Your Company, Address]
Also, if you have changed marital status, or you or your spouse
have changed addresses, please notify [Your Company] at the above
address..