It is important for employees to be aware of the health insurance options available to them during and after their employment. Unfortunately, many are not aware of their eligibility for COBRA benefits, which can provide extended health coverage after leaving the company due to events like involuntary termination. As an employer, educating employees on COBRA benefits and how they work is crucial.

What is COBRA Health Insurance?

COBRA is a federally mandated health insurance option that enables employees to continue enjoying their employer’s group health plan even after experiencing a “qualifying event.” With COBRA continuation coverage in place, employees can avoid the risk of loss of coverage, which would otherwise leave them without coverage during critical times.

What Are COBRA Qualifying Events?

Several qualifying events can make the employee or their family members ineligible. Examples of circumstances that typically are COBRA qualifying events include:

  • Job loss (voluntary or involuntary), a significant factor in the termination of employment
  • Death or divorce (for spouses and dependent children)
  • Reduction in hours of employment worked (from full-time to part-time)
  • Transitioning jobs within the company
  • Certain other life events

In addition to these circumstances, the employee must have insurance coverage when an event occurs. The employer also must offer COBRA benefits, which employers with at least 20 active employees are generally required to do.

What Insurance Coverage Do COBRA Benefits Include?

Under COBRA, employees can receive the same medical, dental, and vision insurance they have at the time of the qualifying event. The insurance must be offered, and they must be enrolled while maintaining their health plans.

How Much Does COBRA Insurance Cost?

The cost of COBRA insurance varies. Employees or their family members who opt for COBRA insurance are responsible for paying the total cost of the entire premium, including the monthly premium and an administration fee for processing payments and claims. This is applicable irrespective of whether an employer was previously contributing towards the insurance costs.

Although COBRA insurance can be an expensive option for employees, it does provide access to health plan coverage at a time when they might not have any other policy. It’s important to note that this coverage is not permanent and serves as a limited-time solution until a new policy is obtained, typically within an 18-month period.

The Importance of Clear and Concise Communication

It is crucial to inform employees about COBRA benefits, as many are unfamiliar with the continuation coverage. Failure to do so can result in stress over coverage, financial hardship when premiums are due, and even loss of medical insurance.

It is also important for employees to understand the specific deadlines that apply to their situation. Failure to meet these deadlines, such as signing up for continuation coverage or paying premiums, can result in losing coverage. Therefore, employees must be aware of these deadlines and take the necessary steps to comply, including understanding their election notice and dependent child status.

It is important for employers to communicate the benefits of COBRA to their employees, even if they may not be receptive to the information. Some employees who have been fired or laid off may be disenchanted and unwilling to listen to what their human resources or plan administrator has to say. Others who have lost coverage due to divorce or death might be emotionally distraught and have difficulty focusing. Despite these obstacles, employers must establish best practices for informing all employees who may require COBRA continuation coverage.

Best Practices for Communicating COBRA Benefits and Options

Employers must ensure employees understand the importance of maintaining their health insurance coverage through COBRA. Clear and concise communication is key in educating employees about their options and responsibilities during life events that trigger COBRA eligibility.

Some best practices include emphasizing the importance of pre-existing conditions coverage, the coverage period, and the amount of time an employee has to elect COBRA. Moreover, discussing the special enrollment period for alternative insurance and the implications of a disability determination are vital.

Use Simple and Jargon-Free Language

It is always good practice to use simple and easy-to-understand language when discussing any topic, particularly health insurance. HR should make sure to explain COBRA benefits in plain and clear language as much as possible. Most employees are not insurance professionals or HR representatives, so it is unreasonable to expect them to understand the terminology or other specifics thoroughly.

Clearly Outline Important Dates and Deadlines

Timing is critical with COBRA coverage. Employers must clearly emphasize essential dates, including the cutoff date for electing COBRA coverage after a qualifying event and the deadlines for premium payments. These dates should be reiterated and communicated in writing, as failing to meet a deadline can put the covered employee’s coverage in peril.

Provide Multiple Channels of Communication

It’s important to understand that each employee has their preferred method of communication. So, offering information through multiple channels can increase the chances that everyone receives and understands the message.

Employers should provide COBRA information through various means such as in-person meetings, physical handouts, email, online portals, and other effective communication channels. Additionally, external resources such as our COBRA FAQ can be a helpful tool for covered employees.

Tips for Effective Communication

No matter how you share COBRA benefits information, there are several ways to make the details more digestible. All methods of communication might include:

  • Infographics or other visual aids
  • Charts with key dates and premium amounts
  • Lists of benefits that are available

Even with well-designed materials, employees may still have questions. A dedicated support channel should be provided to ensure timely resolution of their queries. If possible, this channel could be in the form of a phone line or email, with a direct connection to an HR representative or plan administrator. Such support is often highly appreciated, especially when a deadline is approaching.

Importance of Ongoing Communication and Reminders

COBRA benefits communication isn’t a one-time conversation or stagnant web page.

Employers should regularly communicate benefits to employees so they’re reminded of the available coverage. An initial communication during onboarding should be followed with annual reminders during open enrollment. Should an employee experience a qualifying event, HR should follow up directly with the employee, emphasizing the importance of their months of coverage.

Common Employee Questions and Concerns

While employees can have a myriad of questions, here are some common questions that HR should be prepared to answer:

What happens if I find a new job?

COBRA is a temporary health insurance plan for employees between jobs and waiting for a new health insurance plan to kick in. If an employee becomes eligible for another group health insurance plan, they will no longer qualify for COBRA coverage.

Can I switch from COBRA to a Marketplace plan?

Individuals covered under COBRA can switch to a Marketplace insurance plan. They can do this during the Marketplace open enrollment period or if they experience another qualifying event that triggers a special enrollment period.

What are the deadlines for electing COBRA coverage?

Employees are usually allowed to select coverage within 60 days from the qualifying event date or when they receive a COBRA election notice, whichever is later. Employees can make a claim if coverage is chosen after the previous eligibility expires.

Once coverage is selected, the first premium payment is usually due within 45 days. It’s important to note that the 45-day period begins when coverage is elected, which may be different from when coverage first becomes effective.

Facilitate Effective COBRA Communication

It’s important to ensure your team can communicate COBRA benefits details effectively with employees. This includes developing resources employees can use to access information, ensuring that HR representatives and supervisors understand the benefits, and encouraging regular communication. By having these resources in place, your employees will know how they can maintain their health insurance coverage in the event of something unexpected.

For more help communicating COBRA benefits or other aspects of employee benefits administration, contact us at Progressive Benefit Solutions.