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The Consolidated Omnibus Budget Reconciliation Act of 1985, commonly known as COBRA, is a federal law that requires employers that have 20 or more employees to offer group health plans to employees, their spouses and dependents for a temporary period of continued health care coverage if they lose coverage through the employer’s group health plan.
Group health plans provided by employers with 20 or more employees are subject to COBRA (Separate rules apply to California employers, i.e. CAL COBRA). Employers who have not continuously had 20 employees are included if they had at least 20 employees on more than 50% if their typical business days in the previous calendar year. Both full and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by how many hours the employee must work to be considered full time. For example, if full-time is 40 hours per week, an employee who works 20 hours is counted as one-half an employee. Companies that are part of a controlled group or which have common ownership interests should contact the EBSA or a knowledgeable attorney for issues related to head count.
Qualified beneficiaries also have rights under COBRA. A qualified beneficiary is an employee, the employee's spouse, or an employee's dependent child, who is covered by an employer sponsored group health plan on the day before a qualifying event. Any child born to or placed for adoption with a covered employee during the period of COBRA coverage is also considered a qualified beneficiary.
AFG can help you administer COBRA yourself or we can coordinate your needs with a qualified third-party administrator. Contact us today to start a better process for your company.
AFG understands the complexity in providing COBRA benefits and assists employers with compliance issues such as HIPAA and FMLA.
We can help you maintain extensive communication with all qualified beneficiaries, including letteers regarding COBRA eligibility, benefit costs, premium updates and Medicare eligibility.
AFG works with third-party administrators and web-based service providers to ensure you have the proper tools for providing summary reports detailing active COBRA participants and reply-pending beneficiaries.