Employer/Union-Only Group Waiver Plans and COBRA

10.5 – Employer/Union-Only Group Waiver Plans and COBRA (Rev. 111, 05-03-13, Effective: 05-03-13, Implementation: 05-03-13) The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires employer group health plans with at least 20 employees to offer continuation coverage to plan enrollees who experience a COBRA qualifying event such as termination of employment, death of the participant or a divorce. COBRA requirements apply to active employee plans and retiree plans. Employer/union-sponsored group Medicare plans that meet the definition of “group health plan,” as that term is defined at section 5000(b)(1) of the Internal Revenue Code, may be subject to COBRA requirements. The basic Part A and Part B benefits and any other benefits financed by Medicare through rebate dollars are not subject to COBRA continuation of coverage requirements. Employer/Union sponsors, however, may be required by COBRA to offer continuation of coverage for supplemental benefits that are financed outside of Medicare to beneficiaries enrolled in their plans that experience a COBRA qualifying event. For example, if an employer offered a vision benefit that was integrated into a customized EGWP (Direct Contract or “800 series” plan) but was solely paid for by employer premiums, the employer/union sponsor may be required to offer continuation of coverage only for the vision benefit when a beneficiary enrolled in the plan experiences a COBRA qualifying event. However, nothing in either the Medicare law or the COBRA law prohibits an employer/union sponsor from electing to provide continuation coverage for the entire employer sponsored group health plan (the Medicare benefits along with the non-Medicare supplemental benefits). In doing so, however, an employer/union sponsor must adhere to Medicare requirements. These include the following requirements: 1) When an MAO offering an employer/union-sponsored group plan receives 2 Employer group plans may enter into administrative services only (ASO) arrangements with MAOs whereby the entity provides certain administrative services to a self-funded employer group plan, such as claims adjudication and enrollment services. notification that an individual is no longer eligible for the employer/union group sponsored plan because a COBRA qualifying event has occurred, it must follow the termination procedures documented in the Medicare Managed Care Manual, Chapter 2, §50.7, which only allows prospective termination. Terminations can be effective only at the end of a calendar month; and 2) Although COBRA permits a group health plan to charge up to 102% of the applicable premium for continuation of coverage, an employer/union sponsor that offers COBRA coverage can charge no more than 100% of the premium for the Medicare portion of the benefits offered (Medicare will continue to pay its portion of the cost). If an employer/union sponsor can segregate the premium for the non-Medicare supplemental benefits offered, it can charge up to 102% of the portion of the premium that is attributable to the non-Medicare supplemental benefits. Since in some instances, employer/union sponsors have up to 44 days after a qualifying event to provide notice to an enrollee of a right to elect continuation of coverage, and an enrollee has up to 60 days after receiving the notice to elect continuation of coverage, an enrollee may elect to continue this coverage after the effective date of termination. Under COBRA law, an enrollee who elects continuation of coverage is entitled to have coverage reinstated retroactively back to the date of the termination of coverage. For employer/union sponsors that wish to reinstate beneficiaries who elect continuation of coverage back to the effective date of termination, MAOs offering such plans should submit such reinstatements using Transaction Code 61.