Continuation Coverage

Continuation coverage is coverage your employees have the right to elect after they lose group health coverage provided through their employer-sponsored group health plan. Federal (COBRA) and state laws grant employees and covered dependents the right to purchase the same coverage they had before the qualifying event that resulted in the loss of their group health coverage. The type of continuation coverage your employees qualify for is partially based on how many people you employed during the previous year.

• Your employee loses his or her job.
• Your employee experiences a reduction in hours that results in a loss of group health coverage.
• Your employee becomes eligible for Medicare and loses group health coverage but other members of his or her family still need insurance.
• Your employee divorces, legally separates or dies and his or her spouse and/or children need insurance.
• When a dependent child of your employee turns 26 and loses his or her dependent status.

Employees are instructed to contact their employer to find out what type of continuation coverage is available to them. You must understand which continuation coverage you are subject to under federal and state law. It is your responsibility to correctly calculate and report the number of your employees to the required federal and state agencies and to your insurer.

There are two types of Oregon state continuation coverage. They are described in state law under rules ORS 743.600-602 and ORS 743.610. The types of coverage are different in several ways, including, eligibility criteria, maximum coverage periods, enrollment requirements and cost. ORS 743.610 is the rule for smaller employer groups (less than 20 employees) and employer groups not subject to federal COBRA. The rule for larger employer groups (20 employees or more) is ORS 743.600-602

Oregon law requires eligible enrolled employees and/or dependents be allowed to continue their existing medical insurance coverage when there is a loss of group health coverage. Continued coverage may include additional coverage such as dental or vision. This law allows your employees to continue the same group health insurance coverage for up to nine months after they lose group health coverage.

The employee is responsible for paying the full cost of the group health coverage directly to you, the employer.

As your insurer, Samaritan Health Plans will administer state continuation coverage under ORS 743.610. We will be responsible for sending all required notices to employees, providing any required forms or documents, and answering member questions about eligibility, enrollment, benefits and claims.

As the employer, you will answer questions about premium payments. At the beginning of each calendar year, Samaritan Health Plans will request you provide the date by which payment must be made and the manner in which payment must be provided. We will include this information on a premium rate sheet that will be sent to employees in their election packet. They will receive an election packet within 10 days after we receive notification from you or the employee that they have experienced an event that resulted in a loss of group health coverage.

The employee and/or dependent have 10 days after the date on the election notice to choose continuation coverage. They are required to return a completed election form to Samaritan Health Plans. We will enroll them in continuation coverage and notify you of their election. They will receive the same benefits they had before they lost their group health coverage. They will continue to be covered for nine months, unless there is a reason to terminate coverage earlier.  

Both of these actions will lead to an early termination of continuation coverage for your employee. 

Employees may contact Customer Service at 800-832-4580, 8 a.m. to 8 p.m., Monday through Friday.

You may want to seek guidance from legal counsel to fully understand the law. You can also review the law at: http://www.oregonlaws.org/ors/743B.347. You may contact the Oregon Insurance Division for additional assistance in understanding state continuation law.

Oregon law requires eligible dependents to be allowed to continue their existing group health insurance coverage when there is a loss of coverage due to three specific events: divorce, legal separation or death of the employee. Continued coverage for dental, vision care or prescription drug expenses must be offered to dependents if this coverage was or is available to the subscriber. An eligible spouse is allowed to keep the same group health insurance coverage until he or she becomes Medicare-eligible. The maximum coverage period for a dependent child is until age 26. 

The employee must pay the full cost of group health coverage. In addition, a 2 percent administrative fee can be added to the cost of the coverage. Your plan administrator, or you as plan sponsor, must provide the member the cost of the insurance, the date by which premiums must be paid, and the manner in which payment must be provided.

By law, the plan administer you have designated, or the plan sponsor (employer) is responsible to administer this type of state continuation coverage. This includes sending the required notices within the timeframes specified in law, providing required forms and instructions for the employee to make an election, and following all other additional requirements described in law.

As plan administer, you will answer questions related to all processes and timelines that occur between the time the member(s) lost group health coverage and the time Samaritan Health Plans enrolls the member(s) into continuation coverage. In addition, all member questions related to premium amounts, timelines and payments will be directed to you as well.

Samaritan Health Plans will enroll the spouse and/or dependents in continuation coverage after receiving notification from you of their election. Questions about enrollment, benefits and claims will continue to be answered by Samaritan Health Plans.

The Department of Labor publishes a helpful resource for employees: An Employee’s Guide to Health Benefits Under COBRA.

You can seek guidance from legal counsel to fully understand the law. You can also review the law at: http://www.oregonlaws.org/ors/743.600.

You may contact the Oregon Insurance Division for additional assistance in understanding state continuation law.

The right to COBRA continuation coverage was created by a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA.

Federal law requires you, as the plan sponsor/employer, (or the plan administer you have designated), to administer COBRA continuation coverage. There are extensive rules that require the plan sponsor to accurately follow eligibility criteria, send required notices and procedures, and meet specific timeframes and deadlines. Carefully tracking all COBRA implementation activities (for auditing purposes) and following all other additional requirements described in federal law makes COBRA administration complex. Federal oversight of COBRA is performed by powerful regulatory agencies, including the US Department of Labor (DOL), the Internal Revenue Service (IRS) and the US Department of Health and Humans Services (DHHS). Administration that is not compliant with federal rules puts you at risk for fines or litigation.

Samaritan Health Plans will enroll the spouse and/or dependents in COBRA continuation coverage after receiving notification from you of their election. Questions about enrollment, benefits and claims will continue to be answered by Samaritan Health Plans.

A person is considered a qualified beneficiary after a qualifying event has occurred. There are other special periods when a family member may be added to COBRA continuation coverage.

A qualified beneficiary is a person who was covered by a group health plan on the day before a qualifying event occurred. Qualified beneficiaries include your employee, the employee’s spouse or former spouse, the employee’s dependent child or other legal dependents as outlined in the member handbook.

Qualifying events are specific situations that happen to a covered employee, spouse and/or dependent that result in a loss of group health coverage. Qualifying events include:

• Termination or reduction in hours of a covered employee for reasons other than gross misconduct.
• Death of a covered employee. 
• A covered employee becoming entitled to Medicare. 
• Divorce or legal separation of a covered employee and spouse. 
• A child’s loss of dependent status under the plan.  

Qualifying events occur while the employee/covered dependents are still receiving group health coverage. Second qualifying events occur after the employee/qualified beneficiaries are receiving COBRA continuation coverage.

It is the responsibility of the employee, spouse and/or dependent to report a divorce, legal separation or a child’s loss of dependent status to you or your plan administrator within the required time frame. Termination/reduction in hours, death, or entitlement to Medicare must be reported to the plan administrator (if one was designated) by the employer within 30 days of the event.

When a member is enrolled in COBRA continuation coverage, the plan benefits are the same as when the member was an active member under the group health plan. When a member and his or her dependents elect COBRA, they may select from the coverage plans they had before the event. The same plan options available to plan members not on COBRA must be available to COBRA members.

Each qualified beneficiary has independent election rights. All family members do not need to make the same coverage elections, and they can make separate choices.

The Department of Labor publishes a helpful resource for employees: An Employee’s Guide to Health Benefits Under COBRA.

You may want to seek guidance from legal counsel to fully understand the law.

Visit the Department of Labor’s website for the Employer’s Guide to Group Health Continuation Coverage Under COBRA