COBRA & Direct Billing

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a Federal law for continuation of group health care benefits. It gives certain former employees, retirees, spouses, former spouses and dependent children the right to continue their health coverage at group rates. There are time limits for this coverage. The amount of time is based on the reason that group health coverage was lost.

There are three elements to qualifying for COBRA benefits. COBRA sets specific criteria for plans, qualified beneficiaries and qualifying events.

• Plan Coverage – Typically, group health plans for employers with 20 or more employees have to offer COBRA. Both full- and part-time employees are part of the 20 or more count. Each part-time employee counts as part of a full time employee. The number of hours that the part-time employee works is divided by the hours an employee must work to be considered full time.
• Qualified Beneficiaries - A qualified beneficiary generally is someone who was covered by a group health plan on the day before a qualifying event. This includes an employee, the employee's spouse or an employee's dependent child. In some cases, a retired employee, spouse or dependent child may be considered qualified beneficiaries. In addition, a child born to or placed for adoption with a covered employee while on COBRA is typically considered a qualified beneficiary.
• Qualifying Events – A qualifying event is one that would cause someone to lose coverage under a group health plan. The type of qualifying event will determine who the qualified beneficiaries are and how much time that plan must offer for COBRA. The plan may offer longer continuation periods.

Qualifying events for employees:

• Voluntary or involuntary termination of employment for reasons other than gross misconduct
• Reduction in the number of hours of employment

Qualifying events for spouses:

• Voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct
• Reduction in the hours worked by the covered employee
• Covered employee becoming entitled to Medicare
• Divorce or legal separation of the covered employee
• Death of the covered employee

Qualifying events for dependent children:

• Loss of dependent child status under the plan rules
• Voluntary or involuntary termination of the covered employee's employment for any reason other than gross misconduct
• Reduction in the hours worked by the covered employee
• Covered employee becoming entitled to Medicare
• Divorce or legal separation of the covered employee
• Death of the covered employee

To be eligible for COBRA coverage, you must have been enrolled in your employer's group health plan at the time of the qualifying event. The health plan must continue to be in place for active employees. COBRA continuation is available when a qualifying event occurs that would cause an individual to lose their health care coverage.

As a qualified beneficiary, you have an election period. During this period, you may choose whether to elect COBRA coverage. Anyone else in your family who’s eligible for COBRA may elect on their own. They don’t need to elect with you. However, you or your spouse may elect COBRA on behalf of all other qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child. The election period is at least 60 days. This period starts on the later of the day you lost coverage or the date of your COBRA election notice. The election notice must be provided in person or by first class mail. You must receive it within 14 days after the plan administrator receives notice of your qualifying event.

COBRA coverage begins on the date that health care coverage would otherwise have been lost.

COBRA sets required periods of coverage. A plan may provide even longer periods. Most COBRA beneficiaries are eligible for up to 18 months of coverage. Some qualifying events, or a second qualifying event during the initial period of coverage, may allow up to 36 months of coverage.

Typically, the person covered under COBRA pays for it.

You must pay the first premium payment within 45 days after the date of the COBRA election. That first payment must cover the period of coverage from the date of the COBRA election back to the date of the loss of coverage. After that, premiums are due on the date stated in the plan. There’s a 30-day grace period for each payment. A payment is “made” on the date it’s postmarked.

If you don’t pay the first payment within the 45 days after the COBRA election, COBRA will no longer be available to you. After that, you must make your payments by the end of each grace period.

When you were an active employee, your employer may have paid all or part of your group health coverage. Under COBRA, you’ll most likely pay the entire premium. This means you’ll pay the amount you paid when you were an active employee and the amount your employer paid. There may also have to pay a 2% administrative fee.

Check your health plan documents. They should tell you how you would use your benefits and process claims.

Yes. Disability can extend the 18-month COBRA period. To qualify for additional months, the qualified beneficiary must:

• Have a ruling from the Social Security Administration that they became disabled within the first 60 days of COBRA.
• Send the plan a copy of the Social Security ruling within 60 days of receipt. The plan must have this letter prior to expiration of the 18-month period of coverage.

If these requirements are met, the entire family would have another 11 months of COBRA. You may have to pay more for this additional coverage. Plans can charge 150% of the group cost for the extended period of coverage.

Under the Family and Medical Leave Act (FMLA), you still have health coverage. While on FMLA leave, the health coverage is the same as for active employees. This is not COBRA coverage. FMLA leave is not a qualifying event under COBRA. However, a COBRA qualifying event may occur when an employer no longer has to maintain health benefits under FMLA. Like when an employee on FMLA leave tells the employer they won’t return to work.

If you’re entitled to COBRA coverage, you would have received an initial general notice. You would have received it when you were hired. If you’re no longer eligible for coverage under the group health plan, your plan must give you notice about your COBRA rights.

• Your employer has 30 days after your qualifying event to notify the plan administrator.
• Within 14 days of receiving this notice, the plan must tell you of your right to elect COBRA.
• If you plan to elect COBRA, you must do so within 60 days of the written notice or the day your group health coverage ends, whichever is later. If you don’t reply, you’ll lose your rights to COBRA coverage.
• If you cover your spouse or dependent children on the plan, they may have their own right to elect COBRA.

Yes. You may be able to enroll in coverage through the Health Insurance Marketplace or Medicaid. Visit www.healthcare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to learn more.

Direct Billing lets you conveniently pay for eligible insurance premiums directly from the PayFlex member website. Your employer determines what’s eligible. It’s generally available for retirees, members out on disability and/or members taking a leave of absence.

If you’re eligible to use the Direct Billing service, you’ll receive some type of letter, coupon or premium notice telling you to send your payment. You can easily pay your eligible insurance premiums online. And you can even set up recurring* payments so they take place automatically each month. We’ll process your payments for you so you can continue receiving your health coverage.

*Note: If you set up recurring payments, we’ll stop sending you monthly communications in the mail. We’ll store these documents online so you can view and/or download them. You can also sign up to receive notifications by email, web alert or text message. Just log in and go to your account settings. Click on the notifications link. Then follow the online instructions.

If your plan has the Direct Billing service, you may pay your eligible insurance premiums online. You can make a one-time payment or set up recurring* payments. Or you can mail a check to us. You can find our mailing address on the Contact Us page.

*Note: If you set up recurring payments, we’ll stop sending you monthly communications in the mail. We’ll store these documents online so you can view and/or download them. You can also sign up to receive notifications by email, web alert or text message. Just log in and go to your account settings. Click on the notifications link. Then follow the online instructions.

You’ll need to log in. On your dashboard, you can view the amount and due date of your next payment.

You can sign up to receive a notification by email, web alert or text message. Just log in and go to your account settings. Click on the notifications link. Then follow the online instructions.

Note: We’ll only send documents via email, text or web alert that don’t require a proof of mailing. Documents that require proof of mailing will be sent by mail.