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On August 21, 1996, the Health Insurance Portability and Accountability Act of 1996, (HIPAA) was signed into law (Public Law 104-191). The HIPAA changes some of the continuation coverage requirements under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Generally, these changes will be effective January 1, 1997, regardless of whether the qualifying event occurred before, on or after that date.
The following is a brief description of the changes made to COBRA by HIPAA:
Disability Extension - Under current law, if an individual is entitled to COBRA due to a qualifying event such as termination of employment, loss of coverage following the maximum period of LWOP or reduction of hours, the plan is required to provide an opportunity to elect COBRA coverage for up to 18 months. If the individual entitled to COBRA is disabled (as determined by the Social Security Administration) on or before the qualifying event, and satisfies the applicable notice requirements, the plan must provide COBRA coverage for up to 29 months or until the individual becomes eligible for Medicare benefits, whichever comes first. Effective January 1, 1997, the disability extension will apply to an individual entitled to COBRA and who is disabled (as determined by the Social Security Administration) at any time before or during the first 60 days of COBRA coverage. The new law allows all eligible dependents to continue COBRA coverage, not just the disabled individual, provided the individual satisfies applicable notice requirements.
Definition of Qualified Beneficiary - Individuals entitled to COBRA are qualified beneficiaries. Under current law, a qualified beneficiary is generally an individual who is covered under a group health plan on the day the qualifying event causes a loss of coverage (e.g., termination of employment, divorce from the covered employee, etc). The HIPAA changes this requirement so that a child born to the covered employee or who is placed for adoption with the covered employee during the period of continued coverage under COBRA is a qualified beneficiary, provided the child is added to the employee's continued coverage under COBRA.
Duration of COBRA Continuation Coverage - Under current law, the right to continue COBRA coverage terminates if an individual becomes covered by another employer's group health plan that does not limit or exclude coverage for a preexisting condition. If the individual becomes covered by another group health plan and that plan contains a preexisting conditions limitation or exclusion, COBRA coverage cannot be terminated until the expiration of the preexisting period. Under HIPAA, any group health plan's preexisting condition exclusion period will be reduced month for month by the individual's preceding period of "creditable coverage" under another health plan. This change means that COBRA continuation coverage may be terminated if a COBRA participant becomes covered by a new group health plan with a preexisting conditions exclusion clause that is satisfied by the "creditable coverage" provisions. The HIPAA rules limiting the applicability of exclusions in most employers' health plans for preexisting conditions become effective in plan years beginning on or after July 1, 1997.
Notification to New Employees, Dependents and Board Members
Address and mail the notice directly to the home address of the new participant and/or family.
Notification After Summer Enrollment or a Qualified Event
When a spouse and/or dependent is added to medical coverage, a Notification must be mailed directly to the spouse and/or dependent using the qualifying participant's home address.
Notification After Termination of Employment or Reduction in Working Hours
When the participant terminates employment or a reduction in working hours occurs, the qualifying participant must be mailed a dated Notification, a COBRA Schedule of premiums, and the applicable ERS forms to enroll in COBRA within 60 days of the event.
Notification for Loss of ERS UGIP Health Coverage
When a qualified participant loses health coverage when the maximum period of leave without pay status is reached, the participant and/or dependents must be mailed a dated Notification, a COBRA schedule of premiums, and applicable ERS forms to enroll in COBRA within 60 days of the event.
Assignment of COBRA Benefits
The qualified participant and/or dependents must complete the applicable ERS COBRA Application form and return the form to the Employees Retirement System of Texas (ERS). ERS will contact the participant concerning the approval of the coverage and the effective date. There can be no break in coverage and all premiums must be paid to ERS.
1996/1997 Continuation Coverage Notification
On April 7, 1986, a federal law was enacted (Public Law 99_272, commonly called COBRA). This law requires the State of Texas to offer employees and dependents covered under the Uniform Group Insurance Program (UGIP) the opportunity to temporarily extend their health and dental coverage at the group rates. Continuation coverage is available only when qualifying events cause coverage under the UGIP to end. Coverage under COBRA is limited to the health and dental coverage in effect at the time of the qualifying event.
Who May Continue Coverage
If you are an employee (or a dependent of an employee) covered under the UGIP, you have the right to choose up to 18 months of continued coverage if your UGIP coverage ended due to:
If you are a dependent covered by an employee under the UGIP, you have the right to choose up to 36 months of continued coverage if your UGIP coverage terminates due to loss of dependent status, including such qualifying events as:
If you are a former employee's dependent continuing UGIP coverage under COBRA as a result of the former employee's termination of employment, expiration of coverage following leave without pay, or loss of UGIP eligibility due to reduction of hours, you have the right to extend your coverage for a total continuation period of up to 36 months if you lose eligible-dependent status under the rules of the UGIP provided you were covered as a dependent at the time of the initial qualifying event. Beginning January 1, 1997, a COBRA participant's newborn child or newly adopted child acquired on or after the initial qualifying event also will have the right to extend their coverage. Qualifying events that entitle dependents to the additional continuation period are:
For employees eligible for continued coverage--Your Benefits Coordinator will provide you with a form indicating both the date your coverage terminated and the date of notice. You and/or your dependents must formally elect continuation coverage on the form provided within 60 days of the date of coverage terminated or the date of notice on the form, whichever is later. Each covered participant has the right to elect continued coverage independently. You and your dependents do not have coverage after the date coverage terminated until you formally elect continuation coverage and pay all premiums due retroactive to the first day of the month following the date coverage terminated.
For dependents whose coverage terminates due to loss of dependent status--The member or the covered dependent has the responsibility to inform one of the following of a divorce or when a child loses dependent status within 60 days of the qualifying event date:
If the Benefits Coordinator or the ERS is not notified within 60 days, continued coverage will not be available. Upon notification, the coordinator or the ERS will provide a form for the dependent to complete and forward to the ERS within 60 days of the date of notice on the form or date coverage terminated, whichever is later.
Cost of Continuation Coverage
Persons electing continuation coverage must pay the full premium plus an additional 2% administrative fee. After your election form is processed, you will be notified of the premium amounts. The first premium payment will be due within 45 days from the date the election is processed. To ensure that no break in coverage occurs, the first premium payment will include all premiums due retroactive to the first day of the month following the date coverage terminated. Subsequent month payments are due on the first of each coverage month and must be postmarked by the U.S. Postal Service within 30 days of the due date. If your payment is late, your coverage will be canceled automatically retroactive to the last day of the month in which a full monthly payment was received and not considered late.
Length of Continuation Coverage
Your continued coverage may be canceled for any of the following reasons:
Cancellations will be made effective the last day of the month in which your request in postmarked by the U.S. Postal Service Important: Canceled continuation coverage cannot be reinstated.
Special provision for covered individuals who are determined to be disabled by the SSA
A COBRA participant or a dependent covered by the COBRA participant who is determined under Title II or Title XVI or the Social Security Act to have been disabled on or before the date of termination of employment, expiration of coverage following leave without pay, or loss of eligibility due to reduction of hours may have up to an additional 11 months of continued coverage. The disabled individual may continue coverage for a possible total of 29 months or until Medicare entitlement begins, whichever occurs first. All covered individuals' coverage will be canceled automatically when Medicare entitlement begins. Beginning January 1, 1997, individuals covered by COBRA may be eligible for up to 29 months of continuation coverage if any covered individual is determined by the SSA to have been disabled before or during the first 60 days of continuation coverage provided the original 18-month continuation period began on or after July 1, 1995. All covered individuals may continue coverage for a possible total of 29 months or until Medicare entitlement begins, whichever occurs first. All covered individuals' coverage will be canceled automatically when Medicare entitlement begins. Once the SSA sends you the award letter, you must submit the award letter to the ERS within the original 18-month continuation period. The premium for the additional 11 months of coverage will be 150% of the premium charged for active employees with the same types and levels of coverage. A covered individual who may be eligible for the coverage extension period due to a disability must contact the local SSA office to begin the determination process.
Conversion to individual policy
Within thirty (30) days after the date your COBRA coverage expires, you may enroll in an individual conversion health plan and/or dental plan. Contact your health and/or dental plan for specific information.
Questions about continuation coverage should be directed to the Group Insurance Division of the Employees Retirement System at (800) 252-3645 or (800) 541-5806.