Our attorneys frequently negotiate improved COBRA benefits as part of a severance package, or as benefits in employment agreements. We also advise and counsel clients concerning their entitlement to COBRA and other separation benefits. In addition, we counsel employers on what their responsibility is insofar as COBRA is concerned, with respect to deadlines, minimums, and the administration thereof.
COBRA is a federal statute that stands for Consolidated Omnibus Budget Reform Act. It allows most former employees to remain covered under an employers’ health insurance plan, but these employees will usually have to pay more for it than they did while employed. Under COBRA the former employee is responsible for the entire premium for their health insurance, including both the portion of the premium that they paid during their employment and any portion that their employer paid. For example, if during their employment an employee paid $300 per month and their employer paid $700 per month for their health insurance, under COBRA the employee would pay $1,000 per month for health insurance, and their former employer would pay nothing. The former employee will probably also have to pay an extra 2% of their premium as an administrative fee, which has been approved in the Act.
Former employees are not required to elect coverage under COBRA. In fact, an employee does not have COBRA coverage unless he or she actively signs up for it and tenders payment. Employers and insurance plan administrators are required to provide a departing employee with documents about COBRA within 44 days (30 for employer, then another 14 for the plan administrator) of the end of an employee’s employment. Then, the former employee generally has up to 60 days to decide whether they want COBRA coverage. COBRA coverage generally lasts for up to 18 months; after that, the former employee will no longer be eligible for that health plan.
A claim may arise under COBRA when a former employee cannot obtain COBRA benefits because they or the plan administrator does not send the necessary documents within 44 days or does not make the same benefits available to COBRA recipients that are available to current employees, among other violations. In addition, if an employee has been terminated as part of a company shutdown or mass layoff, their right to the value of lost health insurance benefits may be protected by the WARN Act.
Contact a St. Louis COBRA lawyer our firm for counsel.