What is continuation coverage?
COBRA & State Continuation Coverage give employees the right to keep the group health insurance they would otherwise lose after:
- A reduction of work hours
- Quitting their job
- Losing their job
- Death of subscriber
There are two types of continuation coverage:
- COBRA: a federally-administered program for companies with 20 or more employees.
- State Continuation: a state-administered program for companies with 20 or fewer employees
If you are an employer:
Most often, continuation coverage is sought out because an employer and their employee part ways. When this happens, an employee has the right to continue their coverage on their former employer's policy. When an employee chooses to enroll in continuation coverage, the employee is responsible for 100% of the monthly premium.
Small employers, by default, self-administer continuation programs. They are responsible for collecting the premiums from the individual on continuation. We realize that separations between employers and employees might not always be amicable and might make it hard for employers and employees to be in contact with each other. Third party administration is available, but these parties often play different roles in the collecting of payments. In some cases, third-party administration might already be set up. This varies by state. Please contact us to see if your group already has third-party administration set up or if you would like to set up third party administration.
When you terminate an employee on your dashboard, you have the option to send an email that includes continuation coverage information. (Note: The employer is responsible for telling the employee that continuation coverage is available, choosing to send an email fulfills that requirement.) Their insurance with the company will end on the last day of the month they are terminated. They will also receive continuation paperwork in the mail directly from the insurance carrier that goes over how to enroll in continuation coverage.
If you would like to send the email to the terminated employee, check the box that says "Send Email". Make sure you include the employee’s personal email address instead of their work email, as they are no longer with the company. They will receive the email on the last day of insurance. Shown here:
You can expect to see employees who are enrolled in COBRA/State Continuation on your invoices while they are enrolled into continuation coverage, usually with a designation that they are enrolled in continuation.
If you are an employee:
Employees have 60 days to enroll in COBRA/State Continuation after their last day of coverage (this will always be at the end of the month). COBRA Continuation coverage has a federally mandated 18 months duration. The duration of State of Continuation coverage will vary by state. We can look up this information for you, but a simple Google Search will accomplish the same thing.
For most people, it is best to wait and see if you really need the continuation coverage before you choose to enroll. If you get coverage somewhere else before the 60 days is up, and you do not end up needing to see a provider in those 60 days, you can save yourself quite a bit of money by not enrolling in the continuation coverage. Also, if you enroll in the continuation coverage and then decide you want individual coverage instead, you will have to wait until open enrollment unless you have a qualifying event to enroll in individual coverage.
If you do need to use the coverage within the 60-day window, you can always retroactively enroll as long as you send in the application within the first 60 days. This means that if you are in an accident on day 45 and need to go to the hospital, you can enroll in continuation coverage on day 46. Even if you enrolled on day 46 (after the accident) the coverage would begin on the day after your last day of coverage with your employer, meaning you would be covered for the accident. It is important to note, however, while your coverage is backdated to the date you lost coverage so are your premiums. If you enroll in continuation coverage on day 45, you will owe for the first 30 days of coverage.
If you are receiving ongoing treatment for a chronic illness, it could make sense for you to enroll in continuation coverage right away. You do have the ability, however, to look at other individual options including coverage available on healthcare.gov through the Affordable Care Act.
We generally recommend the following websites for people who are looking into alternate plans as an individual:
This way, you have the option to select a plan that works best for you in terms of coverage and monthly cost, rather than being locked into the plan that you had through your employer. Please note you typically have 30 days after your employer plan ends to sign up for individual coverage. If you are unable to find any suitable options there you can always enroll on this COBRA plan.
There is no penalty for insurance if you are enrolled for at least 10 months out of the year. Thus, if you go 2 months without insurance, you will not be fined come tax season.
Employees can only enroll in the plan that they had with their employer. The only time they are eligible to change their plan is during the company’s open enrollment period. Employees are also responsible for 100% of their premiums. This includes any dependents you want enrolled in continuation coverage as well. Employees are responsible for making payments directly to the employer, and it is up to the employee and the employer to determine how these payments will be made and how they will be collected.
Note: If a company decides cancels the entire group policy, terminated employees will not be able to enroll in COBRA (since the policy is canceled) and will need to enroll in individual insurance.
Please reach out to SimplyInsured's Customer Care Team to confirm if you are eligible for COBRA and next steps for enrollment at the link below: