State of Nj Laws on Insurance Continuation
Health insurance programs help workers and their families take care of their essential medical needs. These programs can be one of the most important benefits provided to an employee. When an employee loses his/her job, often it is the loss of benefits, or the opportunity for benefits, which may be the most devastating aspect of their termination. Congress passed landmark legislation in 1986 to protect the benefits of employees who lose their job. Congress enacted the Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1986. This law, which is part of the Employee Retirement Income Security Act (ERISA), provides protection to employees who lose their job.
When an employee loses his/her job, and that employee had health insurance benefits provided through the company/employer, they have the right to purchase health insurance at their own cost through COBRA. If you lose your job, your company has an obligation to advise you of your COBRA benefits rights. This law provides that you have sixty (60) days to accept coverage or lose all rights to those benefits. Once COBRA insurance coverage benefits are chosen, the employee will be required to pay for this coverage.
There are three elements to qualifying for COBRA benefits. COBRA establishes specific criteria for plans, beneficiaries and events which initiate coverage.
Group health plans for employers with 20 or more employees on more than 50 percent of the working days in the previous calendar year are subject to COBRA. The term "employees" includes all full time and part time employees, as well as self-employed individuals. For this purpose, the term "employees" also includes agents, independent contractors and directors, but only if they are eligible to participate in a group health plan.
A qualified beneficiary, generally, is any individual covered by a group health plan on the day before a qualifying event. A qualified beneficiary may be an employee, the employee's spouse and dependent children, and, in certain cases, a retired employee, the retired employee's spouse and dependent children.
"Qualifying events" are certain types of events that would cause, except for COBRA continuation coverage, an individual to lose health coverage. The type of qualifying event will determine who the qualified beneficiaries are and the required amount of time that a plan must offer the health coverage to them under COBRA. A plan, at its discretion, may provide longer periods of continuation coverage.
The types of qualifying events for employees are:- Voluntary or involuntary termination of employment for reasons other than "gross midconduct"
- Reduction in the number of hours of employment
- Termination of the covered employee's employment for any reason other than "gross midconduct"
- Reduction in the hours worked by the covered employee
- Covered employee's becoming entitled to Medicare
- Divorce or legal seperation of the covered employee
- Death of the covered employee
- Loss of "dependent child" status under the plan rules
Those employees that qualify for COBRA benefits must be offered benefits identical to those they received when they were still employed. For example, an employee may have had medical, hospitalization, dental, vision, and prescription benefits under his/her company plan. If that individual qualifies for COBRA benefits, the same benefits must be offered at the employee's own costs. COBRA benefits must be offered for a maximum period of eighteen (18) months. In some circumstances, if an employee is disabled, he/she may be eligible to receive an extension of COBRA benefits for a period of up to thirty-six (36) months. In addition to paying for COBRA benefits through the employer, an employee may be required to pay a small administrative fee to the former employer to process these claims.
An individual who has difficulties with or a dispute about their COBRA benefits may seek assistance directly from the United States Department of Labor or the New Jersey Department of Labor.
Source: https://www.employmentlawnewjersey.com/cobra.htm
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