How to pay for COBRA continuation coverage

Your group health plan may require you to pay for your continuation coverage under COBRA. The amount charged to qualified beneficiaries can not exceed 102 percent of the cost of the plan for individuals covered under the plan who are in the same situation who have not experienced a qualifying event. In determining COBRA premiums, the plan may include costs paid by employees and employer, plus an additional 2 percent for administrative costs.

 

How to pay for COBRA continuation coverage?

For qualified beneficiaries receiving the 11-month extension disabled, the COBRA premium for those additional months increased to 150 percent of the cost of full coverage of the plan to similarly situated individuals.

The amount charged them COBRA qualified beneficiaries may be increased if you increase the cost of the plan, but generally should be set in advance of each cycle of 12 months premiums. The plan should allow you to pay the required premiums on a monthly basis if requested, and the plan may allow you to make payments to other periods (eg, weekly or quarterly). The election notice must contain all the information you need to understand COBRA premiums you will pay, payment dates and the consequences of a late payment or nonpayment.

 

Electing COBRA Continuation Coverage

When you elect continuation coverage, you may not be required to send any payment with your election form. Yes you may, however, make an initial premium payment within 45 days after the date of election of coverage under COBRA (that is the date on which you mail your election form, if you use first class mail). No make any payment during this period may result in the loss of all your rights under COBRA. The plan can set the dates for payment of premiums for successive periods of coverage (after your initial payment), but should give you the option of making monthly payments and grant a 30-day grace period for payment of any premium.

 

Paying COBRA Premium

You should know that if you do not pay a premium before the first day of a period of coverage, but pay the premium within the grace period for that period of coverage, the plan has the option to cancel your coverage until you receive the payment and then reinstate the coverage retroactive to the beginning of the coverage period. Do not make a payment in full before the end of a grace period could result in the loss of all your rights under COBRA.

If the amount of a payment made to the plan is wrong, but was not significantly less than the outstanding amount, the plan is required to notify you of the deficiency and grant a reasonable period (for this purpose, 30 days is considered reasonable) to pay the difference. The plan is not required to send notifications regarding monthly premiums.

 

Health Coverage Tax Credit and COBRA

Certain individuals may be eligible for a federal tax credit to ease the economic burden of payment of monthly COBRA premiums. Program Trade Adjustment Assistance Act of 2002 or 2002 Trade (Trade Act of 2002) created the Health Coverage Tax Credit (HCTC, for its acronym in English) as a tax credit that can be paid in advance and repaid to the 65 percent of premiums paid in respect of certain types of health insurance coverage (including COBRA continuation coverage).The HCTC is available to certain workers who lose their jobs due to the effects of international trade and who qualify for assistance comerciale setting (TAA) and for certain individuals who are receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC). Individuals who are eligible for the HCTC may choose the amount of the loan is paid monthly to your local health coverage as it becomes payable, or may claim the tax credit on their federal income taxes to year.

The Law of Large Trade Adjustment Assistance 2011 increased the percentage of HCTC, extended eligibility for families who meet the necessary requirements, and extended the COBRA coverage. These changes take effect until 1 January 2014.

In January 2012, the monthly HCTC began paying 72.5 percent of health insurance premiums qualified and individuals began to pay 27.5 percent.

 

Extending COBRA Coverage

The COBRA coverage may be extended through the plan of the former employer for TAA recipients and beneficiaries of PBGC whose end date of COBRA is the November 21, 2011 or later date. TAA recipients are eligible for COBRA coverage expansions while entitled to TAA or until 1 January 2014. PBGC beneficiaries are eligible for COBRA coverage expansions until 1 January 2014. If the predeceases, your spouse or your dependents may receive additional 24 months of COBRA or until 1 January 2014.

The law also extends the HCTC members of the qualified beneficiaries of PBGC to enroll in Medicare family TAA or die or finalize a divorce, are eligible for the HCTC for up to 24 months partier the month of fact, or to the 1 January 2014. The extension corresponds to the tax year 2011; therefore, payments can be claimed directly qualified health plan coverage for your qualifying relative.

Health plans available through Employee Beneficiary Associations Volunteers (VEBAs, for its acronym in English) established as a result of the bankruptcy of a former employer still fit for the HCTC.

 

Coordination with other laws regarding federal benefits

The federal Family and Medical Leave Act (FMLA) requires an employer to maintain coverage under any “group health plan” for an employee to FMLA leave under the same conditions coverage would have been provided if the employee I had continued working. The group health coverage provided under FMLA during a family or medical leave is NOT a continuation of coverage under COBRA, and take FMLA leave is not a COBRA qualifying event. It may occur COBRA qualifying event, however, when it ceases the obligation of an employer to maintain health benefits under FMLA, such as an employee taking FMLA leave decides not to return to work and notifies you by your employer .

 

Other Health Insurance Laws

When considering whether to elect continuation coverage, you should take into account that maintain group health coverage affects their future rights to the safeguards provided under HIPAA. HIPAA limits the duration of any preexisting condition exclusion that would impose a group health plan and generally requires that any exclusion period is reduced by the number of days elapsed individual creditable coverage without a break in coverage of 63 days or more . For this purpose, most health coverage, including coverage under COBRA coverage are considered valid. Choose coverage under COBRA may help you avoid an interruption of 63 days in coverage and, therefore, eliminate or shorten any future period preexisting condition exclusion that could be applied to a future group health plan, insurance company health maintenance organization or health (HMO).