Human Resource Blog

You are a compassionate person, to be concerned about your employee’s health care coverage in this situation. There is no state that requires the health insurance company to cover a pregnancy, simply because the employee (or spouse) had coverage when they became pregnant. If there was such a law, every pregnant woman would cancel her insurance during her second month of pregnancy — because the delivery would still be paid for.

The federal COBRA law applies to companies with 20 or more employees on the group helath insurance policy. Under COBRA, an employee who is terminated can continue his or her group health insurance for up to 18 months. The employee must pay the entire insurance premium under COBRA, including any portion formerly paid by the employer. COBRA (the Consolidated Omnibus Budget Reconciliation Act) applies to employees who lose their health insurance benefits due to hours being reduced, as well as employees who are laid off. It also applies to dependents who lose their health insurance benefits when the employee is laid off, dies, divorces, etc.

An employee who loses their health insurance will recieve COBRA notification within 14 days. The employee has 60 days to decide if they will continue health insurance under COBRA, and an additional 45 days to pay the first premium.

The most recent stimulus package, the ARRA, includes a 65% COBRA subsidy for employees laid off between September 1, 2008 and December 31, 2009. These employees pay just 35% of the usual COBRA premium, with the government picking up the tab on the remainder of the COBRA fee.

Some states have laws that extend COBRA-type coverage to employees of smaller companies. Texas does not.   

COBRA is a federal program that permits employees and their dependents to keep group insurance coverage after termination. COBRA also applies when an employee or dependent loses his or her coverage, as in a divorce, change in status from full-time to part-time, or for another reason. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act.

COBRA applies to employers who have 20 or more employees on a group health insurance program. Under COBRA, the employer has 30 days to notify the insurance plan administrator of the employees termination (or other qualifying event.) The administrator must sent the employee COBRA election forms within 14 days. The employee then has up to 60 days to decide whether he or she will keep the group health insurance.
When an employer is self-insurec, the HR pro may be the COBRA administrator. Usually, however, this duty is handled by the insurance company.
Employees who are fired for gross misconduct do not qualify for COBRA.
If the employee opts to keep the group health insurance, then the employee must pay the entire premium, including any portion that the employer was paying in the past. In addition, the employer may require that the employee pay an additional 2% administration fee.

By law, employers must notify eligible employees of COBRA availability in writing after termination. This is a very complex issue, and includes more regulations than we can cover in this space. Contact your health insurance carrier for sample COBRA forms and more information.

Read more about COBRA regulations at:http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.HTML

There is no federal or state law that requires Louisiana employers to offer health insurance, so there are no regulations that cover it.

This is strictly a private matter between the employer and the employee. Many companies offer health insurance to workers who put in 30 hours per week or more. Others only offer health insurance for employees who work 35 or 40 hours per week.

The only way to know for sure, is to ask the supervisor, owner or HR person, “If I work 32 hours per week, would I still qualify for group insurance?” or “How many hours does an employee need to work, to qualify for health insurance?”

If the employer has 20 or more workers on the health insurance plan, this employee would probably qualify for health insurance coverage under COBRA, the Consolidated Omnibus Budget Reconciliation Act.

COBRA allows an employee to keep his or her group health insurance coverage when they lose their job, or their hours are reduced, or they no longer qualify for insurance through the employer for another reason.

Under COBRA, the employee must pay any portion of the health insurance premium that was paid by the employer in the past. In addition, the employer may charge a fee of 2% as an administration fee. So, the employee ends up paying 102% of the health insurance premium.

In spite of these additional fees, COBRA usually offers better coverage at a lower price than private health insurance available to individuals.

The COBRA regulations specifically state that coverage is available to workers whose hours are reduced “voluntarily or involuntarily,” meaning that even if you choose to work less, you should be covered.

However, be aware that in most cases there is an 18-month maximum limit on coverage under COBRA.

This is a subjective question, and a management decision that each company has to make. There are pros and cons on both sides of the issue.

As you know, COBRA the Consolidated Omnibus Budget Reconciliation Act, requires employers with 20 or more workers to permit employees to extend their group health insurance when the employee is terminated. Dependents are also permitted to extend their group health insurance under COBRA. (Employees who are terminated due to gross misconduct are not eligible for COBRA.)

In most cases, an employee can extend their current group health insurance coverage up to 18 months under COBRA. The employee pays for COBRA, so workers must pay the entire insurance premium, in addition to any portion that the employer paid in the past. In addition, the employer may collect an administration fee of up to 2% of the total premium. So the cost to the former employee can be 102% of the total premium. Even so, COBRA is often a much more affordable option for the unemployed than private health insurance.

Each employer must decide whether to administer their COBRA plan, or hire a third party Cobra administrator, also called a TPA.

PROS to Using a TPA: One of the major benefits of using a TPA is that it limits the employer’s liability. Under many TPA contracts, the TPA is liable for any fines or penalties that the employer faces due to non-compliance with COBRA by the TPA.

Very simply, many employers prefer to delegate the potential liability under COBRA, as well as the duties. TPAs typically charge a flat fee per employee. Even one lawsuit filed by a former employee who did not receive a COBRA notice on time can easily amount to more than several years of TPA fees.

COBRA regulations do change from time to time. Under federal law, employees must be mailed COBRA notices within a certain period. Being even one day late with a notice can potentially result in a fine of $10,000 or more. TPAs are paid to stay current on every COBRA regulation, while HR Directors have many other responsibilities.

Many TPA firms offer other services, such as HIPAA administration. The major TPA firms claim that they can offer COBRA administration services for a lower price than if the employer did it in-house.

CONS to using a TPA: Some small employers with low turnover handle their own COBRA administration. They feel it is not worthwhile paying TPA fees, and can easily track the notices and premiums due, since turnover is low.

Some larger employers add one or more HR people to handle COBRA administration. They reason that they would rather handle this at the company level, rather than contract it out. This gives them more control over the level of service provided.

It’s true that a TPA may not offer former employees the same personalized service they would receive through the company HR department.

With all due respect, if former employees are complaining about the quality of service from the TPA, one option is to hire a different TPA. Many, many companies offer this service. 

If the situation is as you describe, the employer has likely violated several laws including the federal COBRA law and the Colorado Wage Act.

If the employer has 20 or more employees, than they are required under federal law to offer terminated employees an extension of their group health insurance benefits for up to 18 months under COBRA. That’s the Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provision passed in 1986. 

COBRA permits workers who have been terminated to keep their group health insurance coverage. Employees have 60 days after termination to enroll in the COBRA program. If the employee elects to take advantage of COBRA coverage, he or she has 45 days to make the first payment.

An employee who opts for COBRA coverage must pay the entire insurance premium, including any portion of it that was previously paid by the employer. Employers may add a 2% administrative fee, as well. Still, COBRA coverage is almost always cheaper than comparable individual health insurance.

There is one exception. Under federal law, employers are not required to offer COBRA coverage to workers who are terminated for gross misconduct such as theft, making threats or having weapons at work. (Is it possible that your brother is being less than truthful about the reason for his termination?)

The Colorado Wage Act limits the deductions that an employer can make from a worker’s paycheck. From your description, it sounds as if the employer has made an error and deducted too much for insurance premiums.

Almost all companies deduct insurance premiums from an employee’s wages in advance. So, a premium will be deducted on Feb. 14 or earlier for insurance coverage that starts on Feb. 15.

If a full insurance premium was deducted from the employee’s check on Feb. 29, and again from an additional check 2 weeks later, the employee should normally have insurance coverage at least until March 15 or March 30.

It’s possible that the employer simply made a mistake and deducted an extra insurance premium from the worker’s final paycheck. To determine that, the employee needs to find out the date his insurance coverage ended. Then he should compare that to the date of the final insurance deduction.

If there seems to be a discrepancy in the two, and the employer refuses to resolve it, the worker should contact the Colorado Department of Labor and Employment, Division of Labor at 303-318-8441. They enforce the Colorado Wage Act.