The Consolidated Omnibus Budget Reconciliation Act or "COBRA" went into effect in 1986 and gives certain former employees, retirees, spouses, former spouses, and children the right to temporarily continue employer health coverage at group rates. COBRA applies to group health plans sponsored by both private employers and state/local government employers with 20 or more employees in the previous calendar year. Employers with close to 20 employees should review their employee count to confirm an ongoing, or new, responsibility to notify employees of the availability of COBRA coverage.
The COBRA rules outline a specific calculation for determining the number of employees employed by an employer. An employer is subject to COBRA if the employer employed at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. Both full-time and part-time employees are counted to determine if an employer's plan is subject to COBRA (regardless of whether the employee is enrolled in the group health plan). Each part-time employee is counted as a fraction of a full-time employee. The applicable fraction is equal to the number of hours that the part-time employee worked, divided by the hours an employee must work for the employee to consider the employee full-time.
Each year, employers who are close to a 20 employee head-count threshold should review their employee census to determine if they are, in fact, subject to COBRA's requirements. If an employer determines that it did not employ 20 or more employees in the previous calendar year to be subject to COBRA, state mini-COBRA continuation coverage requirements might still apply. Employers who use BAS' Cobra Control Services for COBRA administration should notify CCS of any changes from federal COBRA to state mini-COBRA or vice versa.
For more information COBRA continuation coverage, please contact sales@BASusa.com.