Sections Syndication |
Home : Essentials of Payroll : Insurance Continuation Subsequent to Employment
Insurance Continuation Subsequent to EmploymentInsurance Continuation Subsequent to EmploymentUnder the terms of the Consolidated Omnibus Budget Reconciliation Act, employees of private sector, state, and local governments who lose their jobs have the right to accept continuing health insurance coverage, as long as the former employer had 20 or more employees in the prior year. If an employee is terminated, then he or she can accept coverage for an additional 18 months. If an employee becomes entitled to Medicare coverage or becomes divorced, then the coverage period extends to 36 months. If a spouse or dependent child of an employee loses coverage due to the death of an employee, then they can obtain coverage for up to 36 months. If a dependent child of an employee loses dependent status, then that person can obtain coverage for up to 36 months.
Many third-party medical insurance providers do not allow partial-month Insurance coverage. This Is an Important issue when an employee leaves a company near the beginning of a month, since the company will still pay its share of the medical cost for the remainder of the month, even If the employee is no longer working there. The payroll staff should be sure to charge the departing employee his or her full share of the medical insurance for the full month of medical coverage; this deduction Is frequently missed in companies where more than one payroll is generated per month, since the employee share of the expense Is spread over several pay-checks. Despite the additional manual effort involved In altering the medical insurance deduction on an employee's final paycheck, this can result in significant cost savings to the company,
An employer is required to give notice of potential COBRA coverage to employees when a qualifying event occurs. (Employees are required to inform the health plan administrator of any divorce, disability, or dependent issues that would bring about qualification for benefits under COBRA.) The affected people then have up to 60 days to elect to take COBRA coverage. If an employee chooses coverage, he or she can be required to pay up to 102 percent of the cost of the insurance. And if the employee fails to make timely payments under the terms of the insurance plan (within 30 days of the due date), the COBRA coverage can be terminated. COBRA coverage also will end if the employer stops providing medical coverage to its regular employees, if the covered individual obtains coverage under another health insurance plan subsequent to taking the COBRA coverage, or if the covered individual becomes covered by the Medicare program. Example. A cook at the Humble Pie Company is laid off at the end of March. She is given paperwork to fill out at the time of termination for COBRA coverage. She submits the documentation accepting coverage after 55 days. The company is required to keep her on COBRA, since she filed in a timely manner. After three months, she obtains work with another company and enrolls in its medical insurance program. Because she is now covered by a different insurance program subsequent to her election to accept COBRA coverage, the Humble Pie Company no longer has to provide her COBRA coverage, and so terminates it. 120
times read
|
||||
|
||||
