You and your Eligible Dependents covered under a  group health plan (one of the medical plans or one of the dental plans), or the health care spending account have the option to purchase a temporary continuation of health care coverages at full group rates, plus a 2% administrative charge in certain instances when your coverage would otherwise end.  This is called COBRA coverage.  COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985.

COBRA Participation
If one of the events (such events are referred to as “Qualifying Events”) listed in the chart below causes you or an Eligible Dependent to lose coverage under one of the group health plans, you and/or the Eligible Dependent, as the case may be, are a “Qualified Beneficiary” with respect to such group health plan.  Each Qualified Beneficiary independently may elect to continue coverage under such group plan.  Covered employees may elect COBRA coverage on behalf of their spouse, and parents may elect COBRA coverage on behalf of the eligible Dependents. 

If you adopt or have a Child while covered by COBRA, that Child is also a Qualified Beneficiary entitled to COBRA coverage.

Continued coverage is available for a maximum of
18, 29, or 36 months, depending on the Qualifying Event outlined in the chart on the following page. You may only continue to participate in the health care spending account through the end of the year in which the Qualifying Event occurs.

When the Qualifying Event is the death of an employee, the employee’s becoming entitled to Medicare benefits (under Part A, Part B, or both), the employee’s divorce or legal separation, or a dependent child’s losing eligibility as an Eligible Dependent child, COBRA continuation coverage lasts for up to a total of 36 months.  When the Qualifying Event is the end of employment or reduction of the employee’s hours of employment, and the employee became entitled to Medicare benefits less than 18 months before the Qualifying Event, COBRA continuation coverage for qualified beneficiaries other than the employee lasts until 36 months after the date of Medicare entitlement. 

For example, if a covered employee becomes entitled to Medicare eight months before the date on which his employment terminates, COBRA continuation coverage for his spouse and children can last up to 36 months after the date of Medicare entitlement, which is equal to 28 months after the date of the Qualifying Event (36 months minus 8 months).  Otherwise, when the Qualifying Event is the end of employment or reduction of the employee’s hours of employment, COBRA continuation coverage generally lasts for only up to a total of 18 months.  There are 2 ways in which the 18-month period of COBRA continuation coverage can be extended.

If you or anyone in your family covered under a group health plan is determined by the Social Security Administration (SSA) to be disabled and you notify the Plan Administrator within 60 days of the disability determination and before the close of the initial 18 month period of continuation coverage, each Qualified Beneficiary is entitled to receive up to an additional 11 months of COBRA continuation coverage, for a total maximum of 29 months.  The disability would have to have started at some time before the 60th day of COBRA continuation coverage and must last at least until the end of the initial 18 month period of continuation coverage.

If your family experiences another Qualifying Event while receiving 18 months of COBRA continuation coverage, the spouse and other Eligible Dependents in your family can get up to 18 additional months of COBRA continuation coverage, for a maximum of 36 months, if notice of the second Qualifying Event is properly given to the Plan Administrator.  This extension may be available to the spouse and any dependent children receiving continuation coverage if the employee or former employee dies, becomes entitled to Medicare benefits (under Part A, Part B, or both), or gets divorced or legally separated, or if the dependent child stops being eligible under the Plan as a dependent child, but only if the event would have caused the spouse or dependent child to lose coverage under the group health plan had the first Qualifying Event not occurred.

Sometimes, filing a proceeding in bankruptcy under Title II of the United States Code can be a Qualifying Event.  If a proceeding in bankruptcy is filed with respect to a plan sponsor, and that bankruptcy results in the loss of coverage of any retired employee covered under the plan, the retired employee will become a Qualified Beneficiary with respect to the bankruptcy.  The retired employee’s spouse, surviving spouse, and other Eligible Dependents will also become Qualified Beneficiaries if bankruptcy results in their loss of coverage under the group health plan. 

Choosing COBRA Here are some things to keep in mind about COBRA continuation: You and your eligible dependents have 60 days after your COBRA notice to elect continued participation.  You will have an additional 45-day period to pay any make up contributions you missed from the first day of the COBRA coverage. If COBRA is elected, the coverage previously in effect will generally be continued, including the amount of health care spending account contributions. Coverage will be effective as of the date of the Qualifying Event, unless you waive COBRA coverage and subsequently revoke your waiver within the 60-day election period.  In that case, your election coverage begins on the date you revoke your waiver. You may change coverage during annual enrollment or if you experience a Qualifying Event, as described in the "About Your Benefits" section.

Cost of Participation
COBRA participants must pay monthly premiums for their coverage:

• For medical and dental coverage, premiums are based on the full group rate per covered person set at the beginning of the year, plus 2% to cover administrative costs.
• Health care spending account contributions can be continued on an after-tax basis, plus the 2% administrative charge.
• If you are disabled under the Social Security definition of disability, COBRA premiums for months 19-29 reflect the full group cost per person, plus 2%.

The Trade Act of 2002 created a new tax credit for certain individuals who become eligible for trade adjustment assistance and for certain retired employees who are receiving pension payments from the Pension Benefit Guaranty Corporation (PBGC) (eligible individuals).  Under the new tax provisions, eligible individuals can either take a tax credit or get advance payment of 65% of premiums paid for qualified health insurance including continuation coverage. 

If you have questions about these new tax provisions, you may call the Health Coverage Tax Credit Consumer Contact Center toll-free at 1-866-628-4282.  TTD/TTY callers may call toll-free at 1-866-626-4282.  More information about the Trade Act is also available at www.doleta.gov/tradeact/2002act_index.asp.

Notification
The Benefit Plans Office will notify you by mail of your COBRA election rights when the Qualifying Event is a reduction in hours or termination of employment.  You will receive instructions on how to continue your health care benefits under COBRA.

If your dependents lose coverage due to divorce, legal separation, or loss of dependent status, you (or a family member) must notify the Benefit Plans Office within 60 days of the event so that COBRA can be offered and your election rights can be mailed to you.  Also, to extend coverage beyond 18 months because of disability, notice of the Social Security Administration’s determination must be provided within 60 days after you receive that determination and before the end of the initial 18-month period.

When COBRA Ends
COBRA coverage will end before the maximum continuation period if:

• a person who was covered under COBRA becomes covered under another group health plan not offered by the Company after you elect COBRA (providing the other plan does not have pre-existing condition limitations affecting the covered person; if the other plan has such limitations, COBRA coverage will end when those limitations expire)
• you or your eligible dependent becomes entitled to Medicare after you elect COBRA
• the first required premium is not paid within 45 days, or any subsequent premium is not paid within 30 days of the due date

  or

• the Company’s group health plans are terminated.

Questions concerning your COBRA continuation coverage rights should be addressed to the Plan Administrator.   

For more information about your rights under ERISA, including COBRA, the Health Insurance Portability and Accountability Act (HIPAA), and other laws affecting group health plans, contact the nearest Regional or District Office of the U.S. Department of Labor’s Employee Benefits Social Security Administration (EBSA) in your area or visit the EBSA website at http://www.dol.gov/ebsa.