Human Resources

COBRA - Continuation of Benefits

A federal law (Public Law 99-272, Title X) known as COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985 as amended) requires that most employers sponsoring group health plans offer employees and their families the opportunity for a temporary extension of health coverage (called “continuation coverage") at group rates in certain instances where coverage under the plan would otherwise end.  This notice is intended to inform you, in a summary fashion, of your rights and obligations under the continuation coverage provisions of the law.  This summary of rights should be reviewed by both you and your spouse (if applicable), retained with other benefit documents, and referred to in the event that any action is required on your part. 

If you are an employee of NorthWest Arkansas Community College, covered by its group health plan, you have a right to choose this continuation coverage if you lose your group health coverage because of a reduction in your hours of employment or the termination of your employment (for reasons other than gross misconduct on your part). 

If you are the covered spouse of an employee, you have the right to choose continuation coverage for yourself if you lose group health coverage for any of the following four reasons:

  • The death of the employee;
  • The termination of the employee’s employment (for reasons other than gross misconduct) or a reduction in the employee’s hours of employment;
  • Divorce or legal separation from the employee; or
  • The employee becomes entitled to Medicare      

In the case of a covered dependent child of an employee, he or she has the right to continuation coverage if group health coverage is lost for any of the following five reasons:

  • The death of the employee;
  • The termination of the employee’s employment (for reasons other than gross misconduct) or a reduction in the employee’s hours of employment;
  • Parents’ divorce or legal separation;
  • Employee becomes entitled to Medicare; or
  • The dependent ceases to be a “dependent child” under the terms of the group health plan.

You also have a right to elect continuation coverage if you are covered under the plan as a retiree or spouse or child of a retiree, and lose coverage within one year before or after the (sponsoring employer’s) commencement of proceedings under Title 11 (bankruptcy), United States Code.  Under the law, the employee or a family member has the responsibility to inform NorthWest Arkansas Community College of a divorce, legal separation, or a child losing dependent status under the plan.  This notification must be made within 60 days of the date of the qualifying event, which would cause a loss of coverage.  The notice must be in writing, and should be sent to:

                                                                NorthWest Arkansas Community College
                                                                Human Resources
                                                                One College Drive
                                                                Bentonville, AR  72712

When NorthWest Arkansas Community College is notified that one of these events has happened, it will in turn notify you that you have the right to choose continuation coverage.  Under the law, you have 60 days from the later of the date you would lose coverage or from the date of the notice to elect continuation coverage.  If and when you make this election, coverage will become effective on the day after coverage would otherwise be terminated.

If you do not choose continuation coverage, your group health insurance coverage will terminate in accordance with the provisions outlined in your benefits handbook or other applicable plan documents.

If you choose continuation coverage, your coverage will be identical to the coverage provided under the plan to similarly situated employees or family members.  The law requires that you be afforded the opportunity to maintain continuation coverage for three years unless you lost group health coverage because of a termination of employment or a reduction in hours.  In that case, the required continuation coverage period is 18 months (an extension to 29 months is available under certain circumstances to disabled persons*).  However, the law also provides that your continuation coverage may be terminated for any of the following reasons:

  • The employer/former employer no longer provides group health coverage to any of its employees;
  • The premium for your continuation coverage is not paid in a timely manner;
  • You first become, after electing COBRA continuation coverage, covered under any other group health plan (as an employee or otherwise) which does not contain any exclusion or limitation with respect to any pre-existing condition;
  • You first become, after electing COBRA continuation coverage, entitled to Medicare.

*Note:    A Qualified Beneficiary who is determined under Title II or XVI of the Social Security Act, to have been disabled as of the date of termination of employment or reduction in hours, or within 60 days of COBRA coverage, may be eligible to continue coverage for an additional 11 months (29 months total).  You must notify the employer within 60 days of the determination of disability by the Social Security Administration and prior to the end of the 18-month continuation period.  The employer can charge up to 150% of the applicable premium during the 11-month extension.  The disabled individual must notify the employer 30 days of any final determination that he or she is no longer disabled.  If the coverage is extended to a total of 29 months, extended coverage will cease upon a final determination that the Qualified Beneficiary is no longer disabled.

You do not have to show that you are insurable to choose continuation coverage.  However, you will have to pay the group rate premium plus a 2% administrative fee for your continuation coverage.  The law also requires that, at the end of the 18-month, 20-month, or 36-month continuation coverage period, you must be allowed to enroll in an individual conversion health plan provided under the current group health plan, if the plan provides a conversion privilege.

In addition, under the Health Insurance Portability & Accountability Act (HIPAA, 1996), in certain circumstances, such as when you exhaust COBRA coverage, you may have the right to buy individual health coverage with no pre-existing condition exclusion without having to give evidence of good health.

If you have any questions about this, please contact the person or office shown below.  Also, if you have changed marital status, or you, your spouse, or any eligible covered dependent have changed address, please notify in writing, the person or office shown below:

                                                                Human Resources
                                                                One College Drive
                                                                Bentonville, AR   72712

If any covered child is at a different address, please notify Human Resources, in writing, so that a separate notice may be sent.

 

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