When Health

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When Health Coverage Ends PASBO 48th
Annual Conference March 20, 2003
NCAS Pennsylvania P.O. Box 778974 Harrisburg, PA
17177-8974 [phone] www.ncaspa.com
Presented by Linda M. Zeigler
Executive Director
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AGENDA

• Continuation of Group Health Care Coverage
• the Legislative Arena
•  
• COBRA Considerations for the School Employer
•   Definitions
• Responsibilities of the Employer/Employee/Plan
  Administrator
•   COBRA FMLA
•   COBRA Medicare
•   COBRA Cafeteria Plans
• COBRA Disability Extensions
•   COBRA Reduction or Elimination of Coverage

• Continuation Coverage Mandated Under Public
  School Code 5-513
• Requirements
• School Employer Responsibilities
•  
• HIPAA Certificates of Credible Coverage
• HIPAA Certificate Requirements
• Responsibilities of Employer and Plan
  Administrator
• When Coverage Ends Compliance Issues

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Continuation of Group Health Care Coverage The
Legislative Arena  

•  
• The escalating national problem of uninsured
  citizens continues and
• intensifies.
•  
• Legislative response to guarantee workers under
  group plans equal
• access to health care coverage, protection
  from stringent pre-existing
• condition exclusions, portability of
  benefits between employers,
• access to purchase coverage beyond
  termination dates, and rights for
• dependents losing coverage.
•  
• Recent legislative proposals continue in the
  direction of individual
• protections for example, Federal act
  granting premium tax relief
• to workers losing coverage in corporate
  bankruptcies proposals to
• extend COBRA continuation periods.
•  

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COBRA Considerations for the School Employer

•  
• COBRA Definitions
• What is a Qualified Beneficiary?
• Any individual who, on the day before a
  qualifying event, is
• covered under a group health plan as an
  employee or as a
• spouse or dependent child of the employee
• Any child born or placed for adoption with a
  covered employee
• during a period of COBRA continuation
  coverage
• In the event of a qualifying event that is an
  employer
• bankruptcy, an employee who had retired on or
  before the loss
• of coverage and the spouse or dependent child
  of that employee

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COBRA Considerations for the School Employer

• (Continued) 
• COBRA Definitions
• What is a Qualifying Event?
• A qualifying event is an event that causes the
  covered
• employee, or the spouse or dependent child of
  the covered
• employee to lose coverage under the plan.
• THE EVENT IS ANY OF THE FOLLOWING
• The death of a covered employee
• The termination, or reduction of hours, of a
  covered employee
• resulting in loss of coverage
• The divorce or legal separation from the
  employees spouse
• A covered employees becoming eligible for
  Medicare Benefits

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(Continued) Initial Notice of COBRA
RightsRequired at the time of the employees
initial employmentWritten notice and/or
inclusion of COBRA rights in the plan booklet
given to the employee Employer/Employee
Responsibilities When a Qualifying Event
OccursEmployer must notify the plan
administrator within 30 days of termination loss
of coverage due to reduction in work hours death
of employee employee entitlement to Medicare.
COBRA Considerations for the School Employer
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COBRA Considerations for the School Employer

• (Continued)
• COBRA Definitions
• What is the Continuation Period Per Event?
• Event Period
• Termination or reduction of hours of 18 months
• covered employee
• If second qualifying event occurs within
• the 18 month period, period will be
• extended to 36 months for qualified
• beneficiaries other than employee
• If employee is disabled on the date of
• the qualifying event, or within 60 days,
• continuation period is 29 months for
• qualified beneficiary and all family
• members

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COBRA Considerations for the School Employer

• (Continued)
• COBRA Definitions
• Event Period
• Divorce or legal separation from employee 36
  months
• Death of covered employee 36 months
• Dependent child losing dependent child 36
  months
• status
• Bankruptcy of employer under Title 11
• COBRA applicable to retirees who retired
• on or before the substantial elimination of
• coverage and their spouses and dependents
• for covered employees (and their covered
• widows) who retired on or before the date

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COBRA Considerations for the School Employer
(Continued)
Responsibilities of the Employer/Employee/Plan
Administrator - Employer/Employee
Responsibilities When a Qualifying Event
Occurs Employee/Qualified Beneficiary must
notify plan administrator or employer within 60
days of divorce or legal separation dependent
child ceasing to qualify as dependent. In the
case of a request for disability extension, the
Qualified Beneficiary must provide notice of
Social Security determination to the plan
administrator or the employer within 60 days of
the date of the determination. - Plan
Administrator Responsibilities When
Notice of Qualifying Event is Received Plan
administrator has 14 days from the date of
receiving the Qualifying Event information to
issue the COBRA rights notice to the Qualified
Beneficiary. The plan administrator monitors the
timelines for receipt of initial and subsequent
premiums, and issues termination information as
appropriate. Premium Payment Requirements Initial
premium must be paid within 45 days of the COBRA
election. Subsequent premiums must be made within
30 days of the first day of the coverage period.
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COBRA Considerations for the School Employer

• (Continued)
• COBRA
• The Family Medical Leave Act of 1993
• (FMLA)
• The topic is addressed in Section 54-4980B-10 of
  the
• proposed COBRA regulations with five questions
  and answers.
• An employee covered under the health plan
  immediately prior
• to or during FMLA would have a qualifying
  event on
• - Date of notification to the employer
• of the intent not to return
• - Date when the employee does not return

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COBRA Considerations for the School Employer

• (Continued)
• COBRA
• Medicare
• COBRA Law COBRA coverage ceases when an
  individual
• becomes entitled to (actually covered by)
  Medicare.
• In instances where the covered employee becomes
  entitled to
• Medicare, the period of COBRA available to the
  spouse or
• dependent child can be as long as 36 months
  from the date of
• Medicare coverage, but in any event will not
  be less than 18
• months.
• COBRA administrators can notify a beneficiary
  that COBRA will
• cease when they are eligible for Medicare.
  The beneficiary has

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COBRA Considerations for the School Employer

• (Continued)
• COBRA
• Cafeteria Plans
• Medical plans under a flexible benefit plan are
  subject to COBRA
• Qualified beneficiaries are those covered under
  one of the health
• plans on the day prior to the qualifying
  event.
• Employees who opt out of all health plans are
  not eligible for COBRA
• The qualified beneficiary who has elected COBRA
  has the same
• rights as active employees for elections of
  health options available
• during the open enrollment process.

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COBRA Considerations for the School Employer

• (Continued)
• COBRA
• Disability Extensions
• The 1989 Omnibus Budget Reconciliation Act
  allows qualified
• beneficiaries to an extension of 11
  additional months if they meet
• the requirements and are determined to be
  eligible for Social
• Security disability.
• The disability extension for COBRA applies to
  all qualified
• beneficiaries covered with the disabled
  beneficiary through the
• same initial qualifying event. Each
  qualified beneficiary may elect
• the extension independently.
• Conditions allowing the COBRA extension are
• A covered family member is determined to have
  been

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COBRA Considerations for the School Employer

• (Continued)
• COBRA
• Reduction or Elimination of Coverage
• The 1999 final IRS COBRA regulations specify
  that a
• reduction or elimination of coverage is
  disregarded if in
• anticipation of a qualifying event.
• If coverage for a spouse is cancelled pending a
  divorce or legal
• separation, COBRA must still be offered.
• Upon notice of divorce or legal separation, the
  Employer must
• make coverage available effective the date of
  the divorce or legal
• separation.

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Continuation of Coverage Mandated Under Public
School Code 5-513

• Public School Code 5-513 Requirements
• Annuitants of the Public School Employees
  Retirement System may
• continue to purchase coverage under the group
  health plan until age
• sixty-five, or until they are covered by
  another plan.
•  
• Annuitants are eligible for reinstatement in
  the employers health plan
• if alternative coverage ceases.
•  
• An annuitant is a member of the Public School
  Employees Retirement
• System who has taken a super annuation
  retirement, has retired with
• thirty (30) or more years of credited service
  or has taken disability
• retirement.
•  
• The cost for purchase of annuitant coverage
  shall equal the cost of the
• program for active employees and dependents
  plus an additional two
• percent.
•  
• The school employer must notify annuitants
  within 60 days of their

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HIPAA Certificates of Credible Coverage

• HIPAA group plan portability provisions were
  effective June 30, 1997.
• Portability rules require plans or health
  insurers to issue Certificates
• of Credible Coverage to members losing
  coverage.
• Primary goal of the rule is to prevent the
  imposition of pre-existing
• condition exclusion clauses in cases where
  there has been no significant
• break in coverage.
• Ruling also limited pre-existing condition
  exclusion plan provisions
• limit of six month look-back period prior to
  enrollment date to
• determine pre-existing.
• pregnancy and newborn cannot apply to
  pre-existing
• limit of exclusion period to 12 months post
  enrollment date (18
• months for late enrollments)

  HIPAA Certificate Requirements
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HIPAA Certificates of Credible Coverage

•  (Continued)
• Responsibilities of Employers
• and
• Plan Administrators
• Certificate must be provided within timeframe
  requirement of
• COBRA regulations, in writing, by first class
  mail.
• Administrator only required to provide coverage
  information
• for coverage periods for which it was
  responsible.
• Certificates must give date a waiting period
  began, date
• coverage began and date coverage ended.
• Dependents are also entitled to a written
  Certificate of Credible

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When Coverage Ends - Compliance Issues

• When Coverage Ends Compliance Issues
• Employers are required to comply with COBRA and
  plan coverage
• provisions
• - Monetary penalties for noncompliance
• - Claim liabilities if COBRA rights not
  extended and legal action
• sought by participants
• COBRA and Retiree Continuation of Coverage
  premium rates must
• equal fair value of the cost of the plan to
  active employees (plus 2
• administration fee)
• Employer health plan coverage policies for
  active employees and
• retirees should be in compliance with law,
  fully documented, and