COBRA Continuation Coverage

COBRA (the Consolidated Omnibus Budget Reconciliation Act) is a federal law that requires many employers to allow employees and their dependents ("qualified beneficiaries") to continue group health coverage at their own expense for a period of time after employer-provided coverage ends. A&B administers COBRA coverage for all of the health care plans (including the Health Care Reimbursement Account) offered through FlexSolutions.

The coverage provided under COBRA is the same as that offered to active employees. If the coverages provided to active employees change while you (or your dependents) are receiving coverage through COBRA, your (or your dependents') coverage will change accordingly.

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Who Is Eligible

You may continue your medical, dental and/or vision coverages (and the Health Care Reimbursement Account on an after-tax basis) through COBRA if your coverage ends due to one of the following qualifying events...

  • Your employment with the Company ends (except as a result of gross misconduct), or

  • You lose eligibility because the number of hours you work is reduced.

Your covered dependent may continue his or her medical, dental and/or vision coverages through COBRA if dependent status is lost due to one of the following qualifying events...

  • You die

  • You divorce or legally separate from your spouse

  • You become entitled to Medicare benefits

  • The dependent child loses coverage under the terms of the FlexSolutions program

  • Your employment with A&B ends (except as a result of gross misconduct)

  • You lose eligibility because the number of hours you work is reduced

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Your Coverage Options

At the time your coverage ends, you may...

  • Only elect COBRA coverage under those Plans in which you are already enrolled, and

  • Not add previously eligible but currently uncovered dependents through COBRA.

However once you elect COBRA coverage, you are entitled to participate in the Plans' Open Enrollment (as long as you are still eligible for and participating in COBRA coverage at that time). During Open Enrollment you may...

  • Add previously uncovered (but eligible) dependents to your coverage,

  • Change your plan election(s) - for example, you may switch from the HMSA PPO to the Health Plan Hawaii Plus Plan, and

  • Drop any coverages you no longer want.

Keep in mind that if you declined a particular coverage (either for yourself or your dependents) at the time you became eligible for COBRA coverage or you drop a particular coverage during Open Enrollment, you (or your dependents) may never reenroll in that coverage for the remainder of your COBRA coverage period.

If Your Family Situation Changes...

If while covered under COBRA (as a former employee) you gain a child, either through birth or adoption, you may enroll the child and coverage will be effective immediately—with no pre-existing condition limitation—as long as you enroll the child within 31 calendar days of the birth or placement.

Dependents enrolled in COBRA under such circumstances may continue COBRA coverage for the maximum period allowed (as outlined under How Long COBRA Coverage Lasts).

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Notification Requirements

A&B Is Required To...

A&B must inform you and any eligible dependent of the right to continue coverage under COBRA following...

  • The beginning or end of your employment, or

  • Another qualifying event that affects your (and as a result, your dependents') coverage.

If a spouse is notified, that notice also applies for all other covered dependents residing with the spouse. A COBRA General Notice describes the continuation rights and other important information available under COBRA.

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You (Or Your Dependent) Are Required To...

If coverage for a dependent ends as a result of a divorce or a child losing his or her dependent status, you or your dependent must notify A&B within 60 days of the "qualifying event." If you or the dependent fail to notify A&B within this time frame, COBRA coverage will not be made available to you.

After you (or your dependent) have notified A&B, A&B will then send you a COBRA election form within the time allotted.

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Making A COBRA Election

Any individual who is eligible for, and wants to obtain, COBRA continuation coverage must make his or her election by notifying A&B within 60 days after...

  • Coverage ends as a result of a qualifying event (as outlined under How Long COBRA Coverage Lasts), or

  • The date A&B sends a notice of your right to continue coverage

... whichever occurs last.

While notification to a spouse also applies for all other covered dependents residing with the spouse, each dependent has an independent right to elect continued coverage. No "evidence of insurability" (proof of good health) is required to continue coverage under COBRA.

You and your dependents ("qualified beneficiaries") have the right to elect COBRA even if you have other coverage before you elect coverage (for example, if you have coverage under your spouse's plan at the time your coverage under your FlexSolutions plans end). However, if you obtain other coverage after electing COBRA, your COBRA coverage will end, as specified under How Long COBRA Coverage Lasts.

Each qualified beneficiary has an independent right to elect continuation coverage. For example, both the employee and the employee's spouse may elect continuation coverage, or only one of them. Parents may elect to continue coverage on behalf of their dependent children. A qualified beneficiary may change a prior rejection of continuation coverage any time until 60-day notification date.

If you or your dependents do not elect COBRA continuation coverage, coverage will end on the date explained under When Coverage Ends.

However, if your employment ends due to international trade, such as increased imports or a shift in production to another country, you may become eligible for federal trade adjustment assistance (TAA). Part of this assistance is a 65% tax credit toward the purchase of COBRA coverage if loss of health coverage is trade-related. If you become eligible for TAA after a termination of employment or reduction of hours and did not elect COBRA coverage during your initial 60-day election period, you will be eligible for a second COBRA election period. This second election period begins on the first day of the month in which you are determined to be a TAA-eligible individual provided this second election is made within six months after the date health coverage was originally lost. If you elect COBRA coverage during this second election period, it is effective on the first day of the second election period and not on the date coverage originally was lost. However, the maximum COBRA coverage period is still measured from the date coverage originally was lost.

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How Long COBRA Coverage Lasts

An individual's coverage under COBRA ends as explained below.

For The Following Qualifying Event...

Your termination or a reduction in work hours

The last day of the 18-month period following the date group coverage ended, or on the date A&B stops providing any group health coverage

For dependents, any of the other qualifying events listed under When Coverage Ends

The last day of the 36-month period following the date group coverage ended, or on the date A&B stops providing any group health coverage

Non-payment of premium by the end of the grace period (see Cost of COBRA Coverage)

Retroactive to the last month for which coverage was paid

Medicare entitlement, or coverage under any group health plan benefits that do not include any pre-existing condition limitations that would apply to that individual

The date new coverage begins* (this date may vary for different individuals in the same family)

An applicable pre-existing condition limitation expires under your new group health plan

The date the limitation expires;* until this limitation expires, you can continue COBRA coverage, even if you are already enrolled in the new plan

* This date refers to events that occur after the date you elect COBRA coverage.

Extended COBRA Coverage

The following information applies to your and/or your dependents' COBRA coverage, unless otherwise noted.

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Extended Coverage Due to a Disability

If you (or a covered dependent)...

  • Are disabled when your employment ends or your hours are reduced, or

  • Become disabled at any time during the first 60 days of COBRA coverage

... you will be allowed to continue coverage under COBRA for an additional 11 months. This brings your total COBRA eligibility to 29 months. In the event of a disability, this coverage will be extended to the disabled individual and any other family members covered under COBRA. For the purposes of this provision, being "disabled " means that you are determined to be disabled by the Social Security Administration.

In order to be eligible for this additional continued coverage, you must notify A&B...

  • Within 60 days following the date Social Security notifies you that you are disabled, but

  • No later than the end of your 18-month COBRA coverage period.

You must also notify A&B within 30 days of the determination that you are no longer disabled. The additional COBRA continuation coverage (i.e., coverage beyond the original 18 months) will end if you are no longer disabled.

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Extended COBRA Coverage In California (Cal-COBRA)

For COBRA continuation coverage that begins on and after January 1, 2003, California residents whose COBRA coverage under an insured plan would otherwise end after 18 months can further extend coverage for up to another 18 months. This extended coverage is referred to as "Cal-COBRA" coverage. The insured plans will notify affected COBRA participants at the end of the first 18 months of continuation coverage concerning how to further extend coverage. Also, if you...

  • Are over 60 years of age at the time your employment with A&B ends, and

  • Had worked for A&B for at least the last five years

... you may continue medical coverage for you (and your spouse, if applicable) through COBRA until the earliest of age 65, Medicare entitlement, coverage under another group health plan, cessation of the employer's contract with the insurer, or (for spouses) five years after the COBRA or Cal-COBRA coverage is exhausted. Note that this extended coverage only applies to the insured medical plans and will not be made available to you if you are eligible for coverage through the A&B Retiree Health Care Plan.

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Extended Coverage Due to Another Qualifying Event

If a dependent has continued coverage due to your termination or reduction in hours worked, and another qualifying event (such as your death or a divorce) occurs during the 18-month continuation period, the dependent will be allowed additional COBRA continuation coverage. This extension will be granted for up to a maximum of 36 months from the date COBRA coverage initially began.

Also, if you become entitled to Medicare benefits during the continuation period, your dependents may continue coverage for up to 36 months from the date of the original qualifying event.

In all cases, you must notify A&B within 60 days after a second qualifying event occurs.

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Cost Of COBRA Coverage

You (or your covered dependents) must pay a premium for COBRA continuation coverage. This premium is actuarially determined and may include...

  • The amount you paid toward the cost of this coverage while you were covered as an active employee, plus

  • Any portion of the premium formerly paid by A&B, plus

  • A 2% administration fee.

The premium will not exceed 102% of the rate that would apply for an active plan member with similar coverage on the date this premium was due. However, the amount charged to disabled individuals, individuals on "Cal-COBRA" coverage, or individuals over age 60 after the initial 18-month period may be increased as follows...

  • Disabled individuals on extended COBRA continuation coverage may be charged up to 150%,

  • Individuals on "Cal-COBRA" coverage for months 19 through 36 may be charged up to 110%, and

  • Individuals over age 60 on extended COBRA continuation coverage, may be charged up to 213%

... of the current active rate.

The premium rate will be determined at the beginning of the Plan Year and will apply to anyone who elects to continue coverage during that period. The premium rate will not change during the Plan Year, unless A&B revises the group health care program for all members, or continuing dependent coverage is terminated because there are no longer any eligible dependents under COBRA coverage.

When Payment Is Due

If you elect COBRA coverage, your initial premiums are due by the 45th day following the election date (as determined by the postmark on the election form envelope). Otherwise, you will not be eligible for COBRA coverage. The initial premium payment must include the premiums from the date coverage began.

You must pay additional premiums in monthly installments; however, you will be allowed a 30-day grace period for subsequent monthly premium payments.

A&B may terminate your COBRA coverage if your premium payment is not postmarked before this grace period ends.

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Payment Of Benefits

If any individual on COBRA continuation coverage files a claim for benefits, the benefits will be paid according to Plan provisions.

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Address Changes

You should keep A&B informed of any change of address for you or your family members. You should also keep a copy of any notices you send to A&B.

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For More Information

Further information about COBRA coverage will be provided to you and/or your dependents when you or your dependents become eligible as explained previously.

If you have questions about your COBRA continuation coverage, you should contact A&B or you may contact the nearest Regional or District Office of the U.S. Department of Labor's Employee Benefits Security Administration (EBSA). Addresses and phone numbers of Regional and District EBSA Offices are available through EBSA's website at www.dol.gov/ebsa.

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