The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) generally requires group health plans sponsored by employers with 20 or more employees in the prior year to offer employees and their families the option to continue benefits for limited periods of time when coverage under the plan would otherwise end due to certain qualifying events. These events include voluntary or involuntary job loss, reduction in hours worked, death, divorce, and other life events.
COBRA sets rules for how and when continuation coverage must be offered, how employees and their families may elect COBRA, and what circumstances justify terminating coverage. The length of time for which continuation coverage must be made available depends on the type of qualifying event. For termination of employment or a reduction in hours, the maximum period of COBRA is generally 18 months. Up to 36 months of coverage may be available due to other qualifying events, or if a second qualifying event occurs during the initial period of COBRA coverage.
Please review our COBRA Steps to Success to understand the key areas involved in implementing COBRA for your company. Most states also have laws (commonly referred to as "mini-COBRA" laws) which require that group health plans provide COBRA-like continuation of benefits for certain employees and their families.
South Carolina generally provides employees whose insurance has been terminated under the employer's group policy the right to continue coverage. To be eligible for continuation coverage, the employee must have been continuously insured under the group policy for at least 6 months.
Effective June 7, 2010, a health insurance issuer may not terminate the health insurance coverage of a dependent child due to a medically necessary leave of absence before the earlier of 1 year after the first day of the medically necessary leave of absence or the date on which the coverage would otherwise terminate under the terms of the policy. The dependent child is entitled to the same benefits during the medically necessary leave of absence as if the child continued to be a covered student.A "medically necessary leave of absence" means a leave of absence of a dependent child from a postsecondary educational institution, including an institution of higher education, or any other change in enrollment of the child at such an institution, that:
Click here for more information regarding this requirement.
An employee who has been insured continuously under the group policy for at least 6 months and whose insurance under the group policy has been terminated for any reason other than nonpayment of the required contribution is generally entitled to continue coverage under the group policy for the fractional policy month remaining at termination plus 6 additional policy months. An employee is not eligible to continue coverage under the group policy if the employee:
Continuation of benefits may be terminated before the end of 6 months for the following reasons:
Continuation of coverage is subject to the employee paying the entire group premium, including any portion usually paid by the former employer, before the date each month that the group policy month begins. Notice of the right to continue coverage must be included in each certificate of coverage. In addition, the employer must clearly and meaningfully advise an employee upon termination of the right to continue insurance and must advise the employee of the amount of premium required and of the employee's responsibility to pay each month before the date that the policy month begins.
Under the federal Patient Protection and Affordable Care Act (Health Care Reform), beginning with plan years starting on or after September 23, 2010, group health plans that offer dependent coverage must make the coverage available until a child reaches the age of 26. There is a temporary exception for grandfathered group health plans, which may exclude adult children who are eligible to enroll in an employer-sponsored health plan other than the group health plan of the parent. This exception will no longer be available for plan years beginning on or after January 1, 2014.
Individual states may have requirements that are more favorable to plan participants. For information about your state, please click here and contact your state insurance department for guidance.
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