Continuation Coverage Rights Under COBRA - Legal Notice
This notice contains important information about your right to COBRA continuation coverage, which is a temporary extension of coverage under the New Hanover Regional Medical Center Employee Health Plan (the "Plan") and the New Hanover Regional Medical Center Health Care Flexible Spending Account Plan (the "Health Care FSA Plan"). This notice generally explains COBRA continuation coverage, when it may become available to you and your family, and what you need to do to protect the right to receive it. For additional information about your rights and obligations under the Plan and under federal law, you should review the Plan's summary of benefits or contact the Plan Administrator.
What is COBRA Continuation Coverage?
COBRA continuation coverage is a continuation of Plan coverage when coverage would otherwise end because of a life event known as a "qualifying event." Specific qualifying events are listed later in this notice. After a qualifying event, COBRA continuation coverage must be offered to each person who is a "qualified beneficiary." You, your spouse, and your dependent children could become qualified beneficiaries if coverage under the Plan is lost because of the qualifying event. (Certain newborns, newly adopted children, and alternate recipients under QMCSOs may also be qualified beneficiaries. This is discussed in more detail below.)
Annual Compliance Notices
Who is Entitled to Elect COBRA?
If you are covered under the Plan as an employee, you will become a qualified beneficiary if you lose your coverage under the Plan because either one of the following qualifying events happens:
- Your hours of employment are reduced, or
- Your employment ends for any reason other than your gross misconduct.
If you are covered under the Plan as the spouse of an employee, you will become a qualified beneficiary if you lose your coverage under the Plan because any of the following qualifying events happens:
- Your spouse dies;
- Your spouse's hours of employment are reduced;
- Your spouse's employment ends for any reason other than his or her gross misconduct; or
- You become divorced or legally separated from your spouse.
- Your dependent children that are covered under the Plan will become qualified beneficiaries if they lose coverage under the Plan because any of the following qualifying events happens:
- The parent-employee dies;
- The parent-employee's hours of employment are reduced;
- The employee's employment ends for any reason other than his or her gross misconduct; or
- The child stops being eligible for coverage under the plan as a "dependent child."
When COBRA Coverage is Available
The Plan will offer COBRA continuation coverage to qualified beneficiaries only after the Plan Administrator has been notified that a qualifying event has occurred. When the qualifying event is the end of employment or reduction of hours of employment, or the death of the employee, you need not notify the Plan Administrator of these qualifying events.
YOU MUST GIVE NOTICE OF SOME QUALIFYING EVENTS.
For the other qualifying events (divorce or legal separation of the employee and spouse or a dependent child's losing eligibility for coverage as a dependent child), you must notify the Plan Administrator in writing within 60 days after the qualifying event occurs. You must provide this notice to the Plan Administrator at the address provided at the end of this notice. Your notice must include your name, the covered employee's name (if you are covered as a spouse or dependent), your current address and telephone number, a description of the qualifying event, the date of the event and, in the case of divorce, a copy of the divorce decree. No COBRA election will be available unless you follow the Plan's notice procedures and meet the notice deadline.
How COBRA Coverage is Provided
Once the Plan Administrator receives notice that a qualifying event has occurred, COBRA continuation coverage will be offered to each of the qualified beneficiaries. Each qualified beneficiary will have an independent right to elect COBRA continuation coverage. Covered employees may elect COBRA continuation coverage on behalf of their spouses, and parents may elect COBRA continuation coverage on behalf of their children.
Deadline for COBRA Election
If mailed, your election must be postmarked (or if hand-delivered, your election must be received by the individual at the address specified on the Election Form) no later than 60 days after the date of the COBRA election notice provided to you at the time of your qualifying event (or, if later, 60 days after the date that Plan coverage is lost). IF YOU OR YOUR QUALIFIED BENEFICIARY DO NOT SUBMIT A COMPLETED ELECTION FORM BY THIS DUE DATE, YOU WILL LOSE YOUR RIGHT TO ELECT COBRA.
Special Considerations in Deciding Whether to Elect COBRA
In considering whether to elect COBRA, you should take into account that a failure to elect COBRA will affect your future rights under federal law. First, you can lose the right to avoid having preexisting condition exclusions applied to you by other group health plans if you have more than a 63-day gap in health coverage, and election of COBRA may help you not have such a gap. Second, you will lose the guaranteed right to purchase individual health insurance policies that do not impose such preexisting condition exclusions if you do not get COBRA coverage for the maximum time available to you. Finally, you should take into account that you have special enrollment rights under federal law. You have the right to request special enrollment in another group health plan for which you are otherwise eligible (such as a plan sponsored by your spouse's employer) within 30 days after your group health coverage under the Plan ends because of one of the qualifying events listed above. You will also have the same special enrollment right at the end of COBRA coverage if you get COBRA coverage for the maximum time available to you.
Length of COBRA Coverage
COBRA coverage is a temporary continuation of coverage. The COBRA coverage periods described below are maximum coverage periods. COBRA coverage can end before the end of the maximum coverage period for several reasons, which are described in the section below entitled "Termination of COBRA Coverage Before the End of the Maximum Coverage Period." COBRA continuation coverage lasts for up to a total of 36 months when the qualifying event is:
- The death of the employee,
- The covered employee's divorce or legal separation, or
- A dependent child loses eligibility as a dependent child.
When Plan coverage is lost due to the end of employment or reduction of the employee's hours of employment, and the employee became entitled to Medicare benefits less than 18 months before the qualifying event, COBRA coverage under the Plan's Medical and Dental components for qualified beneficiaries (other than the employee) who lose coverage as a result of the qualifying event can last until up to 36 months after the date of Medicare entitlement. For example, if a covered employee becomes entitled to Medicare 8 months before the date on which his employment terminates, COBRA continuation coverage or his spouse and children can last up to 36 months after the date of Medicare entitlement, which is equal to 28 months after the date of the qualifying event (36 months minus 8 months).
Otherwise, COBRA continuation coverage generally lasts for only up to a total of 18 months when the qualifying event is:
- The end of employment, or
- Reduction of the employee's hours of employment.
Extension of Maximum Coverage Period
If the qualifying event that resulted in your COBRA election was the covered employee's termination of employment or reduction of hours, an extension of the maximum period of coverage may be available if a qualified beneficiary is disabled or a second qualifying event occurs. You must notify the Plan Administrator of a disability or a second qualifying event in order to extend the period of COBRA coverage. Failure to provide notice of a disability or second qualifying event will eliminate the right to extend the period of COBRA coverage. (These extension opportunities do not apply to a period of COBRA coverage resulting from a covered employee's death, divorce, or legal separation or a dependent child's loss of eligibility.)
Disability extension of 18-month period of continuation coverage
If you or anyone in your family covered under the Plan is determined by the Social Security Administration (SSA) to be disabled and you notify the Plan Administrator in a timely fashion, you and your entire family may be entitled to receive up to an additional 11 months of COBRA continuation coverage, for a total maximum of 29 months. The disability would have to have started at some time before the 60th day of COBRA continuation coverage and must last at least until the end of the 18-month period of continuation coverage. You must provide this notice to the Plan Administrator at the address provided at the end of this notice.
You must notify the Plan Administrator in writing within 60 days of the Social Security Administration's determination of disability. Your notice must include a copy of the Social Security Administration disability determination letter, your name, the covered employee's name (if you are covered as a spouse or dependent), and your current address and telephone number. No extension will be available unless you follow the Plan's notice procedures and meet the notice deadline.
Second qualifying event extension of 18-month period of continuation coverage
An extension of coverage will be available to spouses and dependent children who are receiving COBRA coverage if a second qualifying event occurs during the 18 months (or, in the case of a disability extension, the 29 months) following the covered employee's termination of employment or reduction of hours. The maximum amount of COBRA coverage available when a second qualifying event occurs is 36 months. Such second qualifying events may include the death of a covered employee, divorce or legal separation from the covered employee, or a dependent child's ceasing to be eligible for coverage as a dependent under the Plan. These events can be a second qualifying event only if they would have caused the qualified beneficiary to lose coverage under the Plan if the first qualifying event had not occurred. (This extension is no available under the Plan when a covered employee becomes entitled to Medicare after his or her termination of employment or reduction of hours.) You must notify the Plan Administrator in writing within 60 days after the date of the second qualifying event. No extension will be available unless you follow the Plan's notice procedures and meet the notice deadline.
Termination of COBRA Coverage Before the End of the Maximum Coverage Period
COBRA coverage will automatically terminate before the end of the maximum period if:
- Any required premium is not paid in full on time;
- A qualified beneficiary becomes covered, after electing COBRA, under another group health plan (but only after any exclusions of that other plan for a preexisting condition of the qualified beneficiary have been exhausted or satisfied);
- A qualified beneficiary becomes entitled to Medicare benefits (under Part A, Part B, or both) after electing COBRA;
- The employer ceases to provide any group health plan for its employees; or
- During a disability extension period, the disabled qualified beneficiary is determined by the Social Security Administration to be no longer disabled (COBRA coverage for all qualified beneficiaries, not just the disabled qualified beneficiary, will terminate).
For more information about the disability extension period, see the section above entitled "Extension of Maximum Coverage Period (Not Applicable to Health FSA Component)."
COBRA coverage may also be terminated for any reason the Plan would terminate coverage of a participant or beneficiary not receiving COBRA coverage (such as fraud). You must notify the Plan Administrator in writing within 30 days if, after electing COBRA, a qualified beneficiary becomes entitled to Medicare (Part A, Part B, or both) or becomes covered under other group health plan coverage. If a disabled qualified beneficiary is determined by the Social Security Administration to no longer be disabled, you must notify the Plan Administrator of that fact within 30 days after the Social Security Administration's determination.
Cost of COBRA Coverage
You will have to pay the entire cost of your continuation coverage. (See 2016 COBRA Rates). The cost of your continuation coverage will not exceed 102% (150% for certain disabled qualified beneficiaries who continue coverage for more than 18 months) of the applicable premium for the period of continuation coverage.
Payment for COBRA Coverage
Premium payments are due on the first day of each month for that month's coverage. You must make your first premium payment after electing COBRA coverage not later than 45 days after the date of your election. Your first payment must cover the cost of COBRA coverage from the time your coverage under the Plan would have otherwise terminated through the end of the month before the month in which you make your first payment. For example, an employee terminates employment on September 30 and loses coverage on September 30. The employee elects COBRA on November 15. Her initial premium payment equals the premiums for October and November and is due on or before December 30, the 45th day after the date of her COBRA election. If you do not make your first payment for COBRA coverage in full within 45 days after the date of your election, you will lose all COBRA rights under the Plan. You have a 30-day grace period following the premium due date in which to make your premium payment. Failure to make premium payments within this grace period will result in automatic termination of your continuation coverage. NHRMC will not send monthly bills or reminders. If you fail to make a monthly payment before the end of the grace period for that month, you will lose all rights to COBRA coverage under the Plan.
More Information About Individuals Who May Be Qualified Beneficiaries A child born to, adopted by, or placed for adoption with a covered employee during a period of COBRA coverage is considered to be a qualified beneficiary provided that, if the covered employee is a qualified beneficiary, the covered employee has elected COBRA coverage for himself or herself. The child's COBRA coverage begins when the child is enrolled in the Plan, whether through special enrollment or open enrollment, and it lasts for as long as COBRA coverage lasts for other family members of the employee. To be enrolled in the Plan, the child must satisfy the otherwise applicable Plan eligibility requirements (for example, regarding age). A child of the covered employee who is receiving benefits under the Plan pursuant to a qualified medical child support order (QMCSO) received by the Plan Administrator during the covered employee's period of employment with the Plan Administrator is entitled to the same rights to elect COBRA as an eligible dependent child of the covered employee.
COBRA Coverage Under the Health Care Flexible Spending Account (FSA)
If you choose Health Care Flexible Spending Account continuation coverage, you may continue the level of coverage you had in effect immediately preceding the qualifying event. After electing COBRA coverage, you will be eligible to make a change in your benefit election with respect to the Health Care Flexible Spending Account upon the occurrence of any event that permits a similarly situated active employee to make a benefit election change during a Plan Year. If you do not choose continuation coverage, your coverage under the Health Care Flexible Spending Account will end on the date you would otherwise lose coverage. COBRA coverage under the Health Care FSA will be offered only to qualified beneficiaries losing coverage who have underspent accounts. A qualified beneficiary has an underspent account if the annual limit elected by the covered employee, reduced by the reimbursable claims submitted up to the time of the qualifying event, is equal to or more than the amount of the premiums for Health Care FSA COBRA coverage that will be charged for the remainder of the plan year.
COBRA coverage will consist of the Health Care FSA coverage in force at the time of the qualifying event (i.e., the annual deferral amount elected by the employee reduced by the reimbursable claims submitted up to the time of the qualifying event). For example: An employee elects to contribute $2,400 to the Health Care FSA. The employee terminates employment on May 31. As of that date, the employee has submitted reimbursable claims totaling $950 and has made salary reductions of $1,000 (five months × $200). This employee has underspent her account because the remaining annual deferral amount elected by the employee ($1,450) is more than the maximum COBRA premium that may be charged for the rest of the year ($1,428). The remaining annual deferral amount elected by the employee is $1,450 (i.e., $2,400 minus $950). The maximum COBRA premium that may be charged for the seven months remaining in the year is $1,428 (i.e., $1,400 × 102%).
The use-it-or-lose-it rule will continue to apply, so any unused amounts will be forfeited at the end of the plan year, and COBRA coverage will terminate at the end of the plan year. Each qualified beneficiary is entitled to make a separate election for continuation coverage under the Health Care FSA if they are not otherwise covered as a result of another Qualified Beneficiary's election. In order to elect continuation coverage, you must complete the election form(s) and return it to the Plan Administrator within 60 days from the date you would lose coverage for one of the reasons described above or the date you are sent notice of your right to elect continuation coverage, whichever is later. Failure to return the election form within the 60-day period will be considered a waiver of your continuation coverage rights. Qualified beneficiaries may not enroll in the Health Care FSA at open enrollment.
If You Have Questions
Questions concerning the Plan or your COBRA continuation coverage rights should be addressed to a Benefit Administrator of the HR Benefits Team or the Plan Administrator at the address listed below. For more information about your rights under ERISA, including COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, contact the nearest Regional or District Office of the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) in your area or visit the EBSA website at www.dol.gov/ebsa. (Addresses and phone numbers of Regional and District EBSA Offices are available through EBSA's website.)
Keep Your Plan Informed of Address Changes
In order to protect your family's rights, you should keep the Plan Administrator informed of any changes in the addresses of family members. You should also keep a copy, for your records, of any notices you send to the Plan Administrator.
Plan Contact Information
Additional information about the Plan can be obtained from a Benefit Administrator of the HR Benefits Team. Written notices to the Plan Administrator should be sent to the following address:
New Hanover Regional Medical Center
Attn: COBRA - HR Benefits Department
P.O. Box 2318
Wilmington, NC 28401-2318