The arrival of COVID-19 has dramatically changed the lives of many in the United States and around the world. Job loss has been one of the unfortunate consequences of the pandemic. More than 30, 000 people in the United States have lost jobs due to business closures and cutbacks. In the United States, job loss also translates to a loss of health insurance for many.
Even without the global pandemic, U.S. workers have some protection of health insurance under COBRA, but current times make it more important that you understand your rights to employer-sponsored health insurance. For many, job loss because of COVID-19 is the first time they have had to deal with involuntarily leaving a role. We’ve developed this guide so you can learn more about COBRA and the ways in which it applies to you if you’ve lost your job during the coronavirus pandemic.
What Is COBRA?
COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act, which provides workers and their families the choice to continue employer-sponsored health benefits after job loss, a reduction in hours, job transition, death, divorce, and other qualifying life events. You can think of COBRA as ‘gap insurance,’ because it fills the gap in your health insurance coverage that you or your family would experience after losing employee benefits.
You should know that if your employer paid for your benefits, COBRA does not require employees pay for your continued coverage. Instead, separated employees must pay for their temporary coverage, which can be the entire premium. The law requires that businesses with more than 20 employees who sponsor a group health plan give employees and their families continuation coverage in situations where coverage would end.
Health Plans that Fall Under COBRA
Under federal law, all private-sector employers with more than 20 employees must provide continuation coverage. COBRA does not apply to the federal government, but state and local governments must comply. Other groups exempt from complying with COBRA include churches and some religious organizations.
Qualifying Events to Receive Continuation Coverage Under COBRA
Beyond your employer’s requirement to comply with COBRA, you must also have been enrolled in your employer’s group health insurance plan and experience a qualifying event, which is an event that causes someone to lose their health insurance coverage. The type of event determines who receives benefits and for how long.
Covered employees are eligible for coverage in all situations of job loss except if they were terminated for gross misconduct. Cobra does not cover employees who lose coverage because of a reduction in hours. The same caveats apply for coverage to spouses and dependent children, but other situations also exempt family members from continued coverage under COBRA. They include:
- The covered employee becomes eligible for Medicare.
- A spouse is not covered in the case of divorce or legal separation.
- The covered employee dies.
- Once children are no longer dependent, they lose coverage. The Affordable Care ACT requires plans to make coverage available until a child reaches age 26.
Employer Responsibilities Under COBRA
The employer’s group health plan must give the covered employee and any other beneficiaries notice when a qualifying event occurs. The notice should describe their rights to continuing their health coverage and how to make that choice. The plan must provide notice within 14 days. Once you receive notice of your right to COBRA coverage, the law requires you have 60 days to make a decision on whether to continue your coverage.
Even though the law requires notification, many large companies have failed to comply. Employees have accused Citigroup, Lowe’s, and Starbucks of failing to comply, just to name a few. In the most recent lawsuit against Starbucks, a former employee claimed that Starbucks sent out confusing notices with regard to COBRA that did not explain how to enroll in continuation coverage. Instead, the notice instructed the former employee to call Starbucks human resources to visit a website. Starbucks COBRA notices also left out other important information about the conditions in which the employee could lose covers, the plan administrator, and where to make payments.
New Department of Labor Guidelines for Job Loss During COVID-19 Pandemic
In April 2020, the Department of Labor, in conjunction with a few other federal agencies, issued a joint statementspecifically addressing multiple programs and benefits. COBRA was included in this statement. The previous information is law, but until further notice, the following applies:
- If your employer temporarily closes due to COVID-19, you should remain covered under your current healthcare plan. Yet, if you aren’t being paid, your premiums are not getting deducted from your check. If your employer is not paying your premiums, you might have to make payments on your own to make sure your coverage doesn’t lapse.
- If you elect COBRA coverage, you cannot be forced to make payments on your premium more than 45 days from your election.
- You have 30 days to pay your premium before the insurance carrier can consider it late.
- The federal government considers the COVID-19 outbreak period lasting until June 29, 2020. Any time requirements under COBRA can disregard the Outbreak Period. For example, if you lost your job due to COVID-19 and want to elect coverage, your employer had 14 days from June 29 to send you a notice. Similarly, if you received notice in the middle of the outbreak, your 60-day election window did not begin until June 29
Consult with a Workplace Attorney About Your Health Benefits During the Pandemic
It’s a difficult time for many Americans right now, especially for those who have lost their jobs and health insurance benefits. Even after separating from a job, you have rights. If your employer has failed to provide you notice of your rights under COBRA or failed to provide you with enough time to make your choice, you may be eligible to take legal action. Contact the experienced attorneys at Perkins Asbill, A Professional Law Corporation online or at 916-446-2000 to discuss your circumstances and determine your next steps.