A Complete Guide to Qualifying Life Events
The Affordable Health Care Act requires Americans to carry an insurance plan that adheres to the 10 minimum essential benefits. Employers are also required to adhere to the ACA. However, qualifying life events can muddy the waters for open enrollment. Understanding what qualifying life events are applicable for a special enrollment period can help you ensure your employees always have health insurance in Houston.
For a better understanding of this process, and the qualifications it requires, please continue reading.
All employers with more than 20 employees are typically required to provide COBRA coverage and to let their employees know they offer such coverage. Most private-sector employers are required to offer it, including those in Texas.
When group plans are subject to COBRA compliance, there is one small exception to this rule. If an employer has employed over 20 employees during the previous year there is no requirement for compliance. The purpose of COBRA is to offer continued group health care coverage even when that plan has been eliminated.
COBRA was enacted by Congress in 1986 to protect individuals under group health plans. The provision it offers extend to retirees, previous employees, dependent children, and former spouses of recipients. However, COBRA coverage is only applicable when plan members suffer a qualifying life event. These qualifying life events dictate whether or not a person associated with the plan can receive benefits.
In most cases, COBRA compliant plans are more expensive for non-employees and more affordable under a group employer plan for individuals. The greatest advantage to this law is the guarantee of health care coverage during unforeseen life changes. Let’s take a look at what these qualifying life events are and what you need to know about them.
Qualifying Life Events
Qualifying events require employers to continue their health insurance coverage when a group health plan ends because of them. COBRA compliance outlines seven specific life events that qualify for this emergency coverage. They are the following.
- Reduced working hours for employees. If an employee has had their hours reduced they qualify for a change to their plan.
- Termination of employment. Employees that are covered by a COBRA compliant group health care plan qualify for COBRA coverage if and when they are fired. The only exception to this rule is gross misconduct.
- Divorce or legal separation from a covered employee. When a spouse is covered by one of these plans they qualify for changes and a special enrollment period if they are legally separated or divorced.
- An employee passes away. The death of an employee covered by this plan is considered a qualifying life event.
- A dependent child ceases to qualify as one under the plan terms. Typically, children can stay on their parent’s plan until age 26.
- The employee’s entitlement to Medicare begins.
- Employer files for bankruptcy.
Should an employee lose access to their group health plan for any reason that is not considered a COBRA qualifying event the employer is not required to provide them COBRA coverage. Understanding these qualifying events is crucial for employers to avoid offering coverage unnecessarily. Additionally, if a life event doesn’t result in the loss of coverage, employers don’t have to provide coverage.
Alternative qualifying life events include:
- Having or adopting a child.
- Getting married
- Moving to the USA within 28 days of employment
How it Works for Beneficiaries
Once a plan member hits a qualifying event it triggers a process that requires employers to adhere to COBRA requirements. This includes offering coverage to beneficiaries of the employee. Qualified beneficiaries have a right to elect COBRA if they so choose.
Who are Qualified Beneficiaries?
- Individuals who are covered under a plan at least 1 day prior to a qualifying life event
- Spouse of an employee
- Child or dependent of an employee
- Any child who is born or placed for adoption with an employee during COBRA continuation coverage.
A good example of this would be if an employee and her spouse were covered by a health plan before a qualifying life event. The spouse could potentially elect COBRA regardless if the employee denied coverage. This means they choose to use COBRA as an emergency safety net for their health care coverage. The time that a beneficiary or employee opts to have COBRA coverage is also known as the “maximum coverage period.”
The maximum time allotted for COBRA coverage varies from plan to plan, but in general, for group health plans it stays at 30 to 60 days total. Depending on the qualifying life event, it can be extended for up to 36 months, but that’s only under certain stipulations.
Of course, not all loss of health care coverage is due to a qualifying life event. This means that beneficiaries and employees might not be eligible for coverage.
What It Means to Lose Coverage
There are a couple of instances that may result in a loss health insurance in Houston but don’t necessarily qualify individuals for COBRA coverage.
The first is a failure to pay premiums. If employees are failing to pay their side of health care premiums they are not eligible for emergency coverage. Employers are not required to enact COBRA for employees in this situation.
The second is cancellation of coverage. If an employee was accidentally enrolled in a health plan but the plan is canceled that doesn’t count as a qualifying life event for COBRA.
Even partial loss of coverage can actually trigger COBRA rights for employees. An uptick in employee premiums or contributions because of a qualifying event. We’ve covered the basis of what these events are, but it’s important to pay attention to even minor changes in lifestyle as it could result in COBRA enactment without employer knowledge.
Additional Qualifying Life Events
Besides COBRA requirements, health care plans can be changed by other qualifying life events under HIPPA special enrollments events, FMLA Leaves of Absence, Medicare or Medicaid entitlement, significant changes to the employer’s plan. Improvement to your benefits package or a serious change in coverage can also be enough to qualify employees to alter their group health plan.
Ultimately, it is the responsibility of the employer to inform employees that they qualify for the special enrollment period, but it’s important to note any changes to their coverage can be complicated and change the costs of the overall plan.
It’s best to consult with experts before making any changes to your plan or advising your employees to do so.
At Healthcare Consultants Inc., that’s what we do best. For more information about your plan, how to handle qualifying life events, or manage your health insurance in Houston, we’d love to be of assistance. Please reach out to us with any questions you may have about this or other health insurance related requirements.