COBRA

Find answers to common questions regarding COBRA during our Coronavirus crisis.

What employment changes could trigger COBRA coverage?

In our current business environment, many employers need to make difficult business decisions right now, including the possibility of laying off employees. Others may be placing employees on leaves of absence or furloughs. All these actions trigger COBRA coverage.

Insurance contracts generally require employees to be actively at work to remain enrolled in health plan benefits. The known exception to this requirement is for FMLA-approved leaves. But what happens under a leave of absence that is not covered by FMLA, which could occur if they are laid off or furloughed for a period because there is no work? If an employer requires employees to take a leave of absence from work during the COVID-19 pandemic, the employer must also provide COBRA Election Notices.

If the business ceases to exist entirely, there is no COBRA event generally as there is no underlying
plan to attach COBRA rights. That said, as long as one employee remains on a company’s payroll, then COBRA benefits will remain available to eligible participants.

Employers should remind affected employees that a loss of coverage is a qualifying event, which also allows them to qualify for special enrollment in their state or the federal healthcare marketplace, and they may also be eligible for a subsidy (with no penalty to the employer once the employee is no longer employed).

Any termination of employment, absent carrier exception, requires employers to send COBRA election notices to affected employees (and dependents if they reside at a different address) within 14 days of termination. Contact Sterling for help with your COBRA administration needs.