Group health insurance and COBRA

Correct answer: 20

COBRA exempts a group health plan for a calendar year if all employers maintaining it normally employed fewer than 20 employees on a typical business day in the preceding calendar year. So the threshold is 20 or more employees.

Correct answer: 18 months

Termination of employment for any reason other than gross misconduct, including a voluntary resignation, is a qualifying event that gives the employee up to 18 months of COBRA continuation coverage.

Correct answer: 36 months

The death of the covered employee is a qualifying event that gives the surviving spouse and dependent children up to 36 months of continuation coverage.

Correct answer: 102% of the plan's cost

The qualified beneficiary may be charged up to 102% of the applicable premium: the full cost of the coverage plus 2% for administration. The 150% ceiling applies only during the disability extension months.

Correct answer: A termination for gross misconduct is not a COBRA qualifying event, so no continuation right arises from it

Termination of employment triggers COBRA for any reason except gross misconduct. A gross-misconduct discharge is therefore not a qualifying event, and the employee has no continuation right arising from it.

Correct answer: Federal COBRA does not apply to this employer, although a state continuation law may

Federal COBRA does not apply to a plan for a calendar year if the employers maintaining it normally employed fewer than 20 employees on a typical business day in the preceding calendar year. With 12 employees the practice is exempt from federal COBRA; state continuation laws often fill that gap for small groups.

Correct answer: 60 days

The election period is at least 60 days, measured from the later of the date coverage would be lost or the date the election notice is provided.

Correct answer: 100%

In a noncontributory plan the employer pays the entire premium, so all eligible employees are covered: participation must be 100%. This prevents the employer from choosing whom to insure.

Correct answer: 30

Seventy-five percent of 40 eligible employees is 30. A contributory plan commonly requires at least 75% of eligible employees to participate, so at least 30 must enroll.

Correct answer: A certificate of insurance

The master policy is issued to the policyholder. Each insured employee receives a certificate of insurance summarizing the coverage, rather than an individual policy.

Correct answer: To guard against adverse selection

Because group coverage is usually issued without individual evidence of insurability, a group formed just to buy insurance would tend to attract people expecting high claims. Requiring a group formed for another purpose, such as employment, guards against that adverse selection.

Correct answer: Her coverage gains the same vision benefit, because COBRA coverage must match what similarly situated active employees receive

Continuation coverage must be identical to the coverage provided to similarly situated beneficiaries who have not had a qualifying event, and if coverage is modified for that group it must be modified in the same way for qualified beneficiaries.

Correct answer: 29 months

The disability extension adds 11 months to the 18-month period, for a total of 29 months.

Correct answer: 36 months

A dependent child's loss of dependent status under the plan is a qualifying event that carries up to 36 months of continuation coverage.

Correct answer: 14 days

The plan administrator must notify qualified beneficiaries within 14 days of the date the administrator is notified of the qualifying event (multiemployer plans may allow longer).

Correct answer: The reduction in hours is a qualifying event; she may continue coverage for up to 18 months

A reduction in hours that causes loss of coverage is a qualifying event, and for that event the covered employee is herself a qualified beneficiary. The maximum period is 18 months.

Correct answer: The covered employee and the spouse and dependent children who were covered under the plan on the day before the qualifying event

A qualified beneficiary is a spouse or dependent child who was a beneficiary under the plan on the day before the qualifying event, plus the covered employee for termination or reduced hours. A child born to or placed for adoption with the employee during continuation also qualifies.

Correct answer: She is a qualified beneficiary and may be covered under the continuation coverage

A child born to or placed for adoption with the covered employee during the period of continuation coverage is included in the definition of qualified beneficiary.

Correct answer: The employee is usually covered without individual evidence of insurability

Group insurance underwrites the group as a whole; a policy may insure employees with or without evidence of insurability, and timely enrollees are normally covered without it. For group health coverage, federal law does not let the plan base eligibility on health status, so a late enrollee generally waits for the next open enrollment period or a special enrollment event instead of proving insurability.

Correct answer: The employer stops maintaining any group health plan for its employees

COBRA may end early if the employer ceases to maintain any group health plan, if premiums are not paid on time, or if the beneficiary later becomes covered under another group plan or entitled to Medicare. Moving within a nationwide plan's network, a change of insurers, or mere eligibility for another group plan does not end it.

Correct answer: 36 months

Divorce or legal separation from the covered employee is a qualifying event for the spouse, carrying up to 36 months of continuation coverage.

Correct answer: 150% of the plan's cost

During the 11-month disability extension the plan may charge up to 150% of the applicable premium, compared with 102% during the standard period.

Correct answer: An allowance for the cost of administering continuation coverage

The 2% above the full premium is an allowance for administrative costs of providing continuation coverage.

Correct answer: 30 days

For qualifying events such as termination, reduced hours, death or Medicare entitlement, the employer must notify the plan administrator within 30 days.

Correct answer: Retroactively, so there is no gap from the date his coverage was lost

When a qualified beneficiary elects within the election period and pays the premium, continuation coverage reaches back to the date coverage was lost, so there is no gap.

Correct answer: 45 days

The first premium is due no later than 45 days after the date of election.

Correct answer: 36 months

The covered employee's entitlement to Medicare is a qualifying event for the spouse and dependents, carrying up to 36 months of continuation coverage.

Correct answer: Her COBRA coverage may end, because she is now covered under another group health plan

Becoming covered under another group health plan after electing COBRA is one of the events that allow continuation coverage to end early.

Correct answer: 26

Group hospital, medical, surgical and prescription drug coverage that covers children must cover a married or unmarried child until age 26 without regard to financial dependence, residency, student status or employment.

Correct answer: They continue under the new plan on the same terms as similarly situated active employees

Continuation coverage must be identical to the coverage provided to similarly situated active employees, and modifications for that group apply equally to qualified beneficiaries. When the employer changes carriers, beneficiaries move to the new coverage.

Correct answer: The group's premium can be readjusted at renewal based on that group's own claims experience

Group policies may provide for readjustment of the premium rate based on the group's experience at the end of the first or any later policy year. This is experience rating.

Correct answer: Group eligibility must be defined by classes based on conditions of employment, not by the employer choosing individuals

A group policy insures all employees or all of any class or classes determined by conditions pertaining to employment, such as full-time status or job category. Choosing individuals personally invites adverse selection and is not a permitted eligibility basis.

Correct answer: No, notice to the spouse is treated as notice to the other qualified beneficiaries residing with her

Notification to a qualified beneficiary who is the spouse of the covered employee is treated as notification to all other qualified beneficiaries residing with that spouse at the time.

Correct answer: 29 months

If Social Security determines that a qualified beneficiary was disabled at some time during the first 60 days of COBRA, and the plan is notified on time, the 18-month period is extended by 11 months, to 29 months. The determination itself may come later; what counts is that the disability existed during those first 60 days.

Correct answer: Yes, each qualified beneficiary has an independent right to elect continuation coverage

Each qualified beneficiary, including a covered spouse and dependent child, has an independent right to elect COBRA, so one family member's decision does not bind the others.

Correct answer: 18 months, because the qualifying event is the employee's termination

The maximum continuation period depends on the qualifying event, not on who the beneficiary is. Termination of employment carries 18 months for every qualified beneficiary, including the spouse.

Correct answer: A federal law letting qualified beneficiaries elect to continue the employer's group health coverage, at their own expense, for a limited time

COBRA requires the sponsor of a covered group health plan to let each qualified beneficiary who would lose coverage because of a qualifying event elect continuation coverage under the plan. The beneficiary generally pays the premium.