COBRA is the term commonly used to reference the Consolidated Omnibus Budget Reconciliation Act of 1985. Under this federal legislation, most employers who provide health insurance plans to employees must offer continued access to this insurance when certain changes (qualifying events) occur to the status of employees or their dependents.
Under COBRA, employers must offer continued access to group health insurance in accordance with these rules:
Employees and their dependents must be offered continued access for 18 months after:
the employees' hours are reduced, or
they become unemployed for any reason other than gross misconduct.
Continued access for 36 months must be offered to
the dependents of deceased employees
an employee's former spouse following divorce or legal separation
dependent children after they cease to be dependent
active employees who become entitled to Medicare.
If one of these qualifying events occurs, each qualified beneficiary must be offered an opportunity to elect to continue to receive the group health plan coverage that he or she received immediately before the qualifying event. If the plan has a core/noncore feature, the beneficiary may elect core coverage only. At the end of the 18- or 36-month period, employers must offer conversion to an individual policy if the group plan permits conversion.
To cover their administrative costs, employers can require employees and dependents electing continued coverage to pay up to 102% of the insurance premiums. In addition, employers can require disabled employees to pay up to 150% of the insurance premiums after the first 18 months of COBRA coverage.
COBRA does not affect employers with fewer than 20 employees or those with church plans. Nor does it apply to plans maintained by US federal, state or local governments.
To administer continued health plan coverage under COBRA, you do the following:
identify which of your benefit plans are COBRA-eligible
enter and maintain information about employees' dependents
record the events that qualify employees or dependents for continued coverage as they occur, and the qualifying dates
notify employees, former employees and dependents of their eligibility for continued insurance coverage, and record their acceptance or rejection of such coverage. Oracle HR includes a standard COBRA notification letter you can use.
Employees and dependents have 60 days from their qualifying date or the date they receive their notification letter, whichever is later, in which to elect continued coverage. For those who make this choice, you must:
determine and schedule the premium payments to be made for continued coverage, and record the receipt of these payments.
record the eventual termination of their continued coverage.
Oracle HR provides standard letters for informing employees or dependents of their eligibility for continued coverage, or of pending termination of this coverage. You can modify these letters as you wish using SQL*ReportWriter 2.0. The standard letters are:
The COBRA Notification Letter, informing people of their eligibility for continued coverage under COBRA.
The COBRA Grace Period Expiration Letter, informing people electing continued coverage that a premium payment is overdue, and that nonpayment will result in termination of the continued coverage.
The COBRA Expiration Letter, informing people electing continued coverage that this coverage will terminate soon, because the time period over which it was available (18 or 36 months) is ending.
This report shows information about the employees and dependents eligible for continued coverage under COBRA whom you have entered into the system. This report shows employees' names and assignment numbers, or dependents' names and relationships, as well as their qualifying events and dates, their notification date and their COBRA status.
For those who elect continued coverage, it shows the start and end dates of the coverage period, the benefit plan names, and the premium amounts charged.
This report shows information about COBRA payments due and payments received, after you have entered this information into the system. As well as the name and assignment number or relationship of covered employees and dependents, it displays their qualifying events and dates, their amounts due and due dates, and dates of payment receipts, amounts received and amounts outstanding.