One of the employees in your organization has come to you with a potential probl

Question

One of the employees in your organization has come to you with a potential problem. The employee is concerned because their immediate supervisor is disputing a potential claim made under COBRA. Specifically, the employee is getting a divorce and feels that his ex-spouse should be made aware of the possibility of COBRA benefits. The supervisor thinks this idea is silly and that only employees are eligible for COBRA. Answer the following questions based on the above situation:

1) Who is covered under COBRA? That is, who is correct in the above situation, the employee or the supervisor?

2) The supervisor feels that anyone who files a claim under the act should have to pay the premium amount plus 25% for administrative fees. What is your reply?

Explanation / Answer

COBRA is short for Consolidated Omnibus Budget Reconcillaiation ACT which was passed in 1985.This act allows some employees and their dependents, to continue the employer sponsored health insurance coverage for a period of 18 months after leaving their jobs or if terminated.

In case of divorces, the spouses are allowed to continue health insurance under the employee health insurance scheme for upto 36 months. Therefore in the above case study, the employee is correct in stating that his wife has rights under COBRA Act.

The premium amount is usually split up as employee share and company share. The employee has to pay his share + administrative cost for extending the coverage.The administrative fees will not exceed 2%.

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