COBRA coverage time period for spouse and dependent children after 18

[Guest joan s]

A former employee's eligible COBRA coverage time period will expire on February 28, 2001. The current employer will not allow her to enroll her spouse and dependent children until an "open enrollment" period in July, 2001. Is it true that the spouse and dependent children are eligible for 36 months of coverage? 18 months over the former employee's covergae period?

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joan s

[Guest KGibson]

Eligible spouse and dependents are entitled to 36 months of COBRA if a qualifying event was the death or divorce from the eligible employee. HIPAA REQUIRES that they be given the opportunity to apply for coverage under their group plan prior to open enrollment, (based on the assumptions of this situation) unless they are a group not required to comply with HIPAA. This is also critical in the fact that they will be given credit for prior coverage relative to coverage of pre-existing conditions under HIPAA as long as there is not a break in coverage for more than 63 days. So, several questions come up....What is the size of the current employer, and what was the qualifying event for COBRA? The employee may also request a copy of the current summary plan description and there should be a section about eligibility and special enrollment rights under HIPAA. Good luck!

[Guest joan s]

Thanks for your response Kim. The business is a small engineering firm, about 25 - 30 employees. The employee left for another position with a public school system. There has been no break in coverage at any time. The current employeer, the public school system, will not enroll the spouse and dependent children until July, 2001, so what can the former employee do for them until that time?

[Guest KGibson]

HIPAA (Health Insurance Portability Accountability Act) allows for a special enrollment periods and it specifically references one of those times to be when COBRA coverage has been exhausted. Additionally, when the employee originally denied coverage under the group plan because of other coverage (Being COBRA) there should have been some notification of special enrollment rights given to them. Sometimes, it is part of the "fine" print on an enrollment form where an employee signs declining participation. Additionally, it should be in their summary plan description for the group plan. From the information and my understanding of this situation, this individual has met the conditions for a special enrollment, and should speak further with the plan administrator.

[Guest joan s]

The situation as it exists is that the former employee was covered by the new employer 90 days after being hired. The spouse and dependent children will not be eligible for coverage for 3 years from the start of employment. As a result, they have been paying for COBRA coverage with the former employer for the past 18 months (more or less) and will no longer be covered as of 2/28/01. Now, the new employer has indicated that they will not be able to enroll the family (at the employee's expense), until July, 2001.

[Guest KGibson]

Does the plan eligibility state that there is a 3 year waiting period before being eligible to participate, but the employee can have coverage on themselves after 90 days? My other question is: if the 3 year waiting period for dependents applies, is the plan administrator stating that they will be able to enroll July 1, 2001 because that's when their 3 years are up, or has the plan been amended for a shorter waiting period for dependents?

[Guest joan s]

The employer's contract stipulates that new hires are covered after 90 days, their spouse and dependent children will not be covered for 3 years. However, the employee may opt to sign the family on at their own expense at the time of employment or only during "open enrollment"periods before the 3 years is up. The employee opted, at the time of employment, to maintain a COBRA policy with the former employer because the premium was about $200 per month less than it would be with the current employer. Now the employee has been enformed that the COBRA coverage period will soon expire, and does not know where to turn in order to maintain health care coverage for the spouse and dependent children. (Note that the spouse is self employed, so there is no coverage from another source.)

[Guest KGibson]

Wow! That's a hairy one! The reason I say that is I think there could be a question of special enrollment rights under HIPAA, which does apply to dependents as well as the employee. IF I were the employee, I would ask the plan administrator to show me why I could NOT have special enrollment in accordance with HIPAA for my dependents. There could be something that may prohibit that that I am not aware of and have not experienced. It is confusing that they have a 3 year waiting period, yet will allow entrance at open enrollment with less than 3 years. But that is also one thing which makes sense to me that HIPAA applies in this scenario.

If there is a reason that prohibits enrollment, you would be looking for a short term individual policy. Try a plan like through Blue Cross Blue Shield and try to match the plan with the short term needs for financial feasibility. Such as, without maternity, it is much cheaper, Drug coverage is also expensive and may be carved out for premium savings if it will be better economically. Additionally, since the spouse is self employed, try the small business development associations and chamber of commerce in their area for self employed benefit plans.

[Guest joan s]

Many of the options you have offered have been looked at in the past and considered too expensive. The reason for the 3 year waiting period is that is a contractural thing with a Public School Boad of Education. It is negotiated through the union as a way for the BOE to save money. Effectively, they don't care about future employees, only current, so in an effort to settle a contract dispute, and save the district money, both sides agreed to this stipulation, that the employee will be covered at no expense after 90 days, and the spouse and dependent children will be covered at no expense after 3 years. Anytime before that period, would be at the employee's expense, and apparently, only during the open enrollment period. Remember, we are talking about an employer 700+/- employees...

[Guest rmg]

As far as the HIPAA thing: a couple of years ago I had a client (I'm an agent) who was a city. As a government entity, they could opt out of HIPAA but they had to place/make notices that they were doing that and they had to do it each year. A school board might fall under the same part of the legislation but did they opt out in the correct manner?

[Guest KGibson]

I still think HIPAA applies to this situation and would require the dependents to be allowed to apply for coverage under special enrollment, unless as rmg states they opted out with proper notification. Of course, the burden of premium would still be the employees' however, they should still be entitled to apply for coverage. There is only a 30 day window after loosing coverage to apply for a special enrollment period. I would request a copy of the Summary Plan Description and review in detail the HIPAA information and special enrollment rights under the plan. Virtually all group plans are subject to HIPAA.

SPECIAL ENROLLMENT PERIODS UNDER HIPAA INCLUDE:

"GENERALLY - A plan must provide two special enrollment periods for employees and if dependents are generally eligible for the plan, dependents. The first type of special enrollment period is available to any employee or dependent who had other coverage the he loses, if he meets each of the following conditions.:

1) The individual had other health coverage at the time he became eligible for the plan;

2) IF required by the plan or employer, the individual stated in writing he was declining to enroll in the plan because he had the other coverage (if a written statement is required, the individual must be provided a notice describing the effects of failure to elect coverage);

3) Coverage being lost was:

a) COBRA coverage that was exhausted,

b) other coverage for which the individual is no longer elegible (for example, by reason of legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment), or

c) provided by another employer which ceased to pay for it.

HOWEVER, loss of coverage due to a failure to pay premiums will NOT trigger a special enrollment period; nor will loss of coverage for cause (such as making a fraudulent claim or an intentional misrepresentation) trigger a special enrollment period; and

4) The individual requests enrollment under thr group medical plan within 30 days after losing the other coverage.

A group medical plan must provide a description of the special enrollment rights to anyone who declines coverage. The special enrollment period applies separately to employees and dependents.

The second special enrollment period applies when an employee who is a participant or is eligible to participate in a group medical plan (including having met any waiting period) marries, has a child, adopts a child, or has a child placed for adoption. The special enrollment period in this circumstance must extend for at least 30 days beginning on the date of marriage, birth, adoption, or placement for adoption. During this special enrollment period, not only the new dependent, but also the employee and the employee's spouse may enroll. If the new dependent is enrolled within 30 days of the start of the special enrollment period, the coverage is to become effective as of the birth, adoption, or placement for adoption or, for marriage, the first of the month after the request for enrollment."

So to summarize...because they allow them to come on the plan after 90 days of employment, (although they must pay the full premium portion of family coverage for the first 3 years), they have met the requirements outlined above and should pursue this further.