COBRA Rights, Health and Dental Continuation Coverage

The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) requires “qualifying employers” to offer employees, including members of the employee’s immediate family, the option to continue coverage under the employer’s group health and dental insurance plans whenever a “qualifying event” causes the employee to lose such coverage.

Generally, qualified employers are those persons or entities who or which employed twenty or more full-time equivalent employees during the previous calendar year.

Examples of “qualified events” include a person’s loss of group health or dental insurance coverage due to: (1) the death of the covered employee; (2) a divorce or legal separation of the covered employee that terminates the ex-spouse’s eligibility for benefits; (3) a dependent child attaining the age at which she or he is no longer eligible for coverage under the employer’s group plans; or (4) the voluntarily or involuntary termination of a covered employee for any reason other than “gross misconduct.”

COBRA requires that the continuation coverage offered to the qualified employee extend at least 18 months pas the date of the “qualifying event” (which may also be further extended by a state law similar to COBRA).

In addition, COBRA mandates that the employee be given notice of his or her option to extend health or dental plan coverage. The employer must notify the “health plan administrator” within 30 days of the qualifying event that triggered the termination of the group health or dental insurance coverage of the employee. The health plan administrator must then notify the employee of his or her option for extended coverage within an additional 14 days. Generally, the employer is the “health plan administrator” (although at times an insurance carrier may be the health plan administrator). If the employer is also the administrator of the group health plan, then the foregoing time periods are added together and the employer has 44 days within which to provide notice to the employee.

Importantly, if the employee (or former employee) is not provided the required notice within the required time frame, COBRA creates a private right of action. COBRA provides for the assessment of penalties, for each day a COBRA-regulated entity fails to satisfy its duties, as high as $110 per day. In addition, a court, in its discretion, may award reasonable attorney’s fees and costs in an action based upon COBRA.