Learn how COBRA, a provision under ERISA, allows qualified beneficiaries to maintain health coverage after the death of an employed spouse for a finite period.
Table of Contents
Question
Four qualified beneficiaries, including a spouse and three adopted stepchildren under the age of 26, are insured under the employed spouse’s fully insured employer health plan when the employed spouse unexpectedly passes away. Under what act can the deceased employee’s qualified beneficiaries maintain health coverage for an applicable, finite period?
Answer
Patient Protection and Affordable Care Act (PPACA).
Explanation
The Consolidated Omnibus Budget Reconciliation Act (COBRA), a provision under the Employee Retirement Income Security Act (ERISA), allows qualified beneficiaries to maintain health coverage under their employed spouse’s fully insured employer health plan for an applicable, finite period in the event of the employed spouse’s unexpected death.
In this scenario, the four qualified beneficiaries – the spouse and three adopted stepchildren under the age of 26 – are eligible for COBRA continuation coverage. COBRA requires group health plans sponsored by employers with 20 or more employees to offer continuation of health coverage to qualified beneficiaries when they lose coverage due to certain qualifying events, such as the death of the covered employee.
The length of COBRA continuation coverage depends on the qualifying event. In the case of the employed spouse’s death, the qualified beneficiaries are entitled to maintain health coverage for up to 36 months from the date of the qualifying event. This finite period allows the beneficiaries to continue receiving the same health benefits they had under the employed spouse’s plan while they explore alternative coverage options, such as individual health insurance plans or coverage through a new employer.
It is important to note that while COBRA allows qualified beneficiaries to maintain health coverage, they are typically responsible for paying the entire premium, which can be up to 102% of the cost of the plan (the full cost of the premium plus a 2% administrative fee). The employer is required to notify the health plan administrator of the qualifying event within 30 days, and the administrator must then provide the qualified beneficiaries with information about their COBRA rights and how to elect continuation coverage.
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