COBRA Benefit Options
COBRA is an acronym for the federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985. State Employees and dependents losing eligibility for benefits due to termination of employment, divorce, turning age 26, etc., have the right to continue certain health-related group benefits. The law does not require that COBRA coverage be made available if an employee is terminated for gross misconduct.
COBRA Continuation Rights
Employees of the State of Montana covered by the State Employee Group Benefits Plan
You have the right to continue medical, dental, and vision benefits for yourself and your dependents. Continuation is available for a maximum of 18 months when coverage is lost due to any of the following qualifying events:
- Layoff or reduction in force (COBRA eligibility begins after the six month period of continuing employer contribution as required in 2-18-1205, MCA);
- Voluntary or involuntary termination of employment for reasons other than gross misconduct;
- Reduction in regularly scheduled work hours below 40 per pay period or movement to a less than six month temporary position; or
- Extended leave of absence (beyond the 12 month employee self‑pay period).
Spouse or dependent of an employee covered by the State Employee Group Benefits Plan
You have an independent right to continue any current medical, dental, and vision coverage if eligibility is lost due to any of the following qualifying events:
- Loss of eligibility by the employee due to any of the events listed above (coverage can be continued for 18 months);
- For a spouse and children, divorce or legal separation from the employee (coverage can be continued for 36months);
- For a dependent child, attainment of age 26 or some other event resulting in loss of dependent status (coverage can be continued for 36 months);
- The death of the employee (coverage can be continued for 36 months). However, state law provides for continued coverage of surviving dependents, when alternative group coverage is unavailable or until equivalent health care benefits are obtained. Rights under state law (described below) are not limited to a set period of time.
Surviving Dependent Rights
A surviving spouse of a deceased employee or retiree covered by the State plan at the time of death may continue existing medical, dental, and vision coverage by self-paying the entire monthly payment for benefits. The spouse may continue coverage indefinitely, unless she or he remarries and through the marriage becomes eligible for other equivalent health care benefits.
Surviving children may continue coverage until they become eligible for other health care benefits or turn age 26. If a surviving child loses eligibility due to turning age 26, the provision (4) above applies and coverage can be continued under COBRA as described.
Surviving dependents are sent forms at the time of loss to continue coverage if they choose.
Continuing Long-Term Care
If you have group Long-Term Care Insurance through UNUM Life Insurance, contact Health Care and Benefits Division for a form to continue this benefit by converting to an individual policy.This form must be submitted to Health Care and Benefits Division within 31 days of the end of group coverage.
Newly Acquired Dependents
New spouse and/or child may be added to the COBRA member’s coverage for the duration of that coverage, provided appropriate payment for benefits is paid.
Impact of a Second Qualifying Event
If a dependent on a COBRA member’s coverage or a newly acquired dependent added to a COBRA member’s coverage loses eligibility due to another Qualifying Event (such as a child turning age 26), the dependent has an independent right to continue coverage for 36 months from the date of the original Qualifying Event.
If an employee who has continued State group insurance for 18 months under COBRA becomes entitled to Medicare during this period (thus losing COBRA rights), COBRA coverage for qualified dependents may be extended up to 36 months from the date of the original Qualifying Event.
Disability Coverage Extension
If an employee or dependent is disabled (as determined by Social Security) at the time of a qualifying event which involves termination, reduction in hours, or one of the other events described above under COBRA Continuation Rights or within the first 60 days of COBRA continuation coverage, the normal 18 month continuation period may be extended to 29 months. If an employee or dependent becomes disabled during the COBRA period, Health Care and Benefits Division must be notified of the disability within 60 days after the determination of disability has been made by Social Security and prior to the end of the normal 18 month continuation period. Coverage for dependents of a disabled individual with COBRA coverage may also be continued. Payment for the additional 11 months of benefits coverage may be higher than normal COBRA payment for benefits ‑ check with Health Care and Benefits Division for the correct rate. If an individual is determined to be no longer disabled during the COBRA period, the individual must notify Health Care and Benefits Division within 30 days of that determination.
COBRA Coverage Timeframe
Depending on the circumstances, the coverage may be kept for up to 18, 29, or 36 months (or potentially even for life for certain retirees of bankrupt companies) under federal law -- state law may expand benefits in some cases.
| Employee | |
| QUALIFYING EVENT | DURATION OF COBRA COVERAGE |
| Reduction in Hours | 18 months |
| Termination of Employment* | 18 months |
| Disabled as determined by the
Social Security Administration
on or before 60 days after
Qualifying Event Date***
|
Up to 29 months if still disabled |
| Spouse of Employee | |
| QUALIFYING EVENT | DURATION OF COBRA COVERAGE |
| Death of Spouse | 36 months, state law provides for continued coverage of surviving
dependents when alternative group
coverage is unavailable.
See Surviving Dependent Rights above
|
| Termination of Employment of Spouse (i.e., the employee)* | 18 months |
| Divorce or Legal Separation | 36 months |
| Spouse (i.e., the employee) becomes entitled to Medicare (if prior to experiencing a Qualifying Event that is the termination, or reduction in hours, of employment) | 36 monthsfrom spouse's date of Medicare entitlement or, if longer, 18 months from the spouse's Qualifying Event date) 29 months if there is a disability extension) |
| Second Qualifying Event** | 36 months |
| Disabled as determined by the Social Security Administration on or before 60 days after Qualifying Event Date*** | Up to 29 months if still disabled |
| Dependent Child of Employee | |
| QUALIFYING EVENT | DURATION OF COBRA COVERAGE |
| Death of Parent (i.e., the employee) | 36 months |
| Termination of Employment of Parent(i.e., the employee)* | 18 months |
| Reduction in Hours of Employment of Parent (i.e., the employee) | 18 months |
| Parent (i.e., the employee) becomes entitled to Medicare (if prior to experiencing a Qualifying Event that is the termination, or reduction in hours, of employment) | 36 months from parent's date of Medicare entitlement or, if longer, 18 months from the parent's Qualifying Event date (29 months if there is a disability extension) |
| Second Qualifying Event** | 36 months |
| Divorce or Legal Separation of Parents | 36 months |
| Dependent Child Ceases to be eligible under the group health plan (reaches age 26) | 36 months |
| Disabled as determined by the Social Security Administration on or before 60 days after Qualifying Event Date*** | Up to 29 months if still disabled |
**This law does not require that COBRA coverage be made available if an employee is terminated for gross misconduct.
** If a spouse or dependent child has already started 18 months of COBRA continuation coverage when an event that would allow 36 months occurs, the maximum duration will increase to 36 months. In no case may the total amount of continued coverage be more than 36 months. Medicare entitlement is not considered a second Qualifying Event unless it would serve as a first Qualifying Event (i.e., would result in loss of coverage under the group health plan), which is not common.
*** If a Qualified Beneficiary is eligible for the extension to 29 months due to disability, the other family members on COBRA are also eligible for the same extension. Note: You must notify the plan administrator within 60 days of the determination of your disability status by the Social Security Administration.
Electing COBRA
If you lose or leave your job, or if another event occurs that would cause you to lose coverage under an employer's group health plan, you may have the right to elect COBRA health care continuation coverage under the plan. In making this important decision, there are a number of considerations you should take into account, including:
- You might want to elect COBRA coverage because, in the future, you could become covered under an employer group health plan that has a pre-existing condition exclusion. If you have a 63-day break in coverage between plans (excluding new employee waiting periods for new coverage), then you may not be given credit for your existing coverage under the HIPAA law-- HIPAA law provides credit for past coverage toward pre-existing waiting period on the new plan. COBRA coverage can help you avoid having a 63-day break in coverage and also counts toward reducing any pre-existing condition exclusion.
- COBRA coverage protects your right to buy individual health coverage with no pre-existing condition exclusion. As described above, if certain requirements are met, you and your family may have the right to buy individual health coverage with no pre-existing condition exclusion, without having to give evidence of good health. These requirements include electing COBRA coverage as long as it is available to you. Thus, failure to elect COBRA coverage may cause you to lose your guaranteed rights to purchase individual health benefits. For details on how COBRA applies to being able to buy individual health care benefits on a guaranteed basis, see the separate section on the federal law HIPAA.
Continuation Procedures
For loss of dependent eligibility due to divorce, legal separation, attainment of age 26 by a child, or some other event resulting in loss of dependent status, the dependent (or employee) must notify Health Care and Benefits Division of the event within 60 days after the date of the event.
COBRA Enrollment Options
Employees Losing Coverage - If you choose to enroll in COBRA, medical coverage for yourself is required; dental and vision benefits for yourself are optional. You may choose to continue medical, dental, and/or vision coverage for your currently covered dependents, or delete them from coverage.
Dependents Losing Coverage- Medical coverage is required if it was carried previously; dental coverage is optional, but only available if it was carried previously. Note: Dental only coverage may be elected by, or for, a dependent who had Dental only coverage prior to the COBRA qualifying event.
Medical Plan Election -You may remain in your current medical plan, or a higher deductible medical plan, if available, can be elected for the remainder of the current plan year. The COBRA participant is allowed to elect any of the medical plans at the beginning of each plan year.
Termination of Coverage Continuation Rights
Continued coverage under COBRA will be terminated before the end of the allowed continuation period if:
-
You fail to pay the payment for benefits for your continuation coverage by the 1st day of the month of coverage or within the following 30‑day grace period.
-
You become entitled to Medicare benefits after electing COBRA.
-
You, through employment, marriage, or some other means, become covered under another group plan; unless the other group plan contains exclusions or limitations on pre‑existing conditions
-
The State of Montana no longer provides group health coverage to any of its employees.
-
You continued COBRA for an extended period due to a disability, but are later determined to be no longer disabled.
New Employer Coverage of Pre-Existing Condition Ends COBRA Coverage
Complete coverage (including coverage of pre‑existing conditions) by your new employer plan ends your COBRA coverage under your State Employee Benefits plan. Contact your new employer to verify the date of full coverage, and notify Health Care and Benefits Division immediately. If you need to provide verification of the months of continuous coverage under the State Employee Benefits Plan for your new employer in order to reduce or eliminate a waiting period on prescription drug coverage or preexisting conditions, request a written Certification of Creditable Coverage from Health Care and Benefits Division.
Any months of continuous health coverage (including COBRA coverage) which you and your family have had prior to enrolling in a health plan with a new employer, will reduce month for month, the new plan's waiting period for coverage of a pre‑existing condition ‑‑ provided there has been no more than a 63-day break since the previous coverage ended. In general, if you have been continuously covered for at least 12 months (18 months for late enrollees) with no more than a 63-day break between that coverage and your new employer's coverage, you will receive immediate coverage for prescription drug coverage or pre‑existing conditions under the new plan.
Payment for Benefits Requirements
- You have 45 days from the date of your election to make any payments for benefits (the current month's payment and back payments for any period since coverage was lost). A large payment for benefits and interrupted coverage can be avoided by early election and prompt payment.
- If your coverage is interrupted because you elected COBRA coverage towards the end of your election period, all payments for benefits must be paid before coverage will be reinstated or claims processed.
- Thereafter, you are responsible for paying the entire monthly payment for benefits by the 1st of the month of coverage or within the following 30 day grace period. Following the 30 day grace period, your coverage will be automatically canceled upon non‑payment for benefits and no reinstatement of COBRA coverage is available.
- You will not receive a monthly statement of payment for benefits due, but Health Care and Benefits Division does provide payment books.
Paying for COBRA Coverage
If you elect COBRA coverage, you must pay the total monthly payment for benefits plus an additional two percent administrative surcharge.
