COMPTROLLER'S SEAL STATE OF CONNECTICUT

STATE OF CONNECTICUT

NANCY WYMAN
COMPTROLLER

OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775

MARK OJAKIAN
DEPUTY COMPTROLLER

COMPTROLLER'S MEMORANDUM NO. 97 - 58

November 21, 1997

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION: All Personnel and Payroll Officers
SUBJECT: Continuation Medical and Dental Coverage (COBRA)
Health Insurance Portability and Accountability Act of 1996 (HIPAA)

I. INTRODUCTION

The purpose of this memorandum is to advise of the passage of two laws related to health insurance coverage. The first is Public Act 97-268 which concerns the continuation of health benefits under group health plans; the second is a federal law, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which concerns coverage for pre-existing conditions and required notice of prior coverage.

II. CONTINUATION OF MEDICAL AND DENTAL COVERAGE (COBRA)

Public Act 97-268 abolishes the state's group health insurance continuation law and instead requires employers to offer employees and their dependents continued participation in the group plan pursuant to the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. The effect of this act on the state employees health plan is that it decreases the length of continuation coverage the state must offer for qualifying events resulting from changes in employment status from 24 months to 18 months.

III. SCHEDULE OF CONTINUATION COVERAGE

The schedule below is effective for qualifying events occurring on and after October 1, 1997 and replaces the schedule provided in Comptroller's Memorandum No. 95-3, Continuation Medical and Dental Coverage, issued February 1, 1995.

The schedule indicates the various qualifying events, the qualified beneficiary(ies), and the period of time for which coverage may be continued. Duration of continuation coverage is based on the type of qualifying event which triggers the entitlement to this benefit.

QUALIFYING EVENTQUALIFIED BENEFICIARYLENGTH OF COVERAGE
Terminated Employee
Enrolled Employee and/or
Enrolled Dependents
18 months*

Employee Laid Off or
Whose Hours Have Been
Reduced
Enrolled Employee and/or
Enrolled Dependents
18 months*

Leave-of-Absence
Without Pay

Enrolled Employee and/or
Enrolled Dependents
18 months*
Termination, Layoff or
Reduction in Hours

Enrolled Employee and/or
Enrolled Dependents Disabled
According to Social Security
29 months*
Death of Employee or Retiree
Enrolled Dependents of
Decedent
36 months
Divorce or Legal

Enrolled/Divorced/Legally
Separated Spouse and/or Other
Eligible Dependents
36 months

Dependent Child No Longer
Qualifying as Dependent
Enrolled Dependent Child36 months

* A Qualified Beneficiary who, according to Social Security, becomes disabled during the first 60 days of COBRA continuation coverage is entitled to an extension of coverage to 29 months. The 29 months of coverage eligibility extends to all Qualified Beneficiaries, not just employees.

Except in the case of the employee's death, coverage through the state group remains in effect for the qualified beneficiary until the first day of the second month following the qualifying event, at which time continuation coverage, if so elected, becomes effective. Coverage through the state group ends the last day of the month an employee becomes deceased.

Under the law, the employee, spouse, or other family member has the responsibility to inform the employing agency personnel or payroll officer of a divorce, legal separation or a child losing dependent status under state-sponsored coverage.

In the case of family or medical leave from employment pursuant to Conn. General Statutes Section 5-248a, the employee and covered dependents can remain on the agency's group for a maximum of 24 weeks in any two year period. The employee is obligated to pay directly to the agency his or her share of any insurance premium due; the agency will continue to pay for its share of the premium. At the expiration of such leave, the employee has the option of continuation coverage for an additional 18 month period under COBRA by paying 102% of the group rate.

For any other leave of absence without pay, during the first four months the employee is eligible to remain on the agency's group provided he or she pays the full premium for the insurance. If the leave extends beyond four months, the employee has the option of continuation coverage for an additional 18 months under COBRA by paying 102% of the group rate.

IV. COBRA NOTIFICATION AND PAYMENT

New Employees:
All new employees must be notified of their eligibility for continuation coverage in conjunction with the hiring process. The attached notice must be distributed to the new employee as part of orientation.

Notification Form:
A revised CO-1022 "Group Health Insurance Continuation Coverage Election" is attached to this memorandum. It should be used in connection with all coverages except CIGNA dental insurance for which a CO-1022-1 (also attached) is completed. Be sure to provide all pertinent information in Section 1 of the election form prior to issuing it to the qualified beneficiary. Revised Forms CO-1022 and CO-1022-1 should be available for order in approximately 1 month. In the interim, please use duplicates of the attachments to this memorandum.

Qualifying Event:
The qualified beneficiary(s) must be informed of their right to continuation coverage within 14 days of the qualifying event. If the qualifying event is a termination of employment, notice should be given at the time of the exit interview, if one occurs. If there is no exit interview at time of termination, and with all other qualifying events, notice should be mailed to the last known address of the qualified beneficiary. A copy of the notice and a record of its mailing should be retained by the agency.

Election:
The qualified beneficiary must elect continuation coverage within 60 days of the date coverage would otherwise terminate through the agency group, or the date of the agency notice informing him or her of eligibility for continuation coverage, whichever occurs later. Unless otherwise requested, election to continue coverage will be deemed to include an election on behalf of all qualified beneficiaries included on the contract who would otherwise lose such coverage because of the qualifying event.

Premium Payment:
The qualified beneficiary will be billed directly by the COBRA Administrator or, in the case of CIGNA dental insurance, directly by the insurer.

Miscellaneous:
Health insurance coverage is on the basis of a calendar month only. If the date of a qualifying event results in a final paycheck covering only a partial vendor payment due in the month coverage terminates, the agency must implement one of the following two procedures:

  1. Obtain a cash payment from the former employee or other qualified beneficiary to complete payment for the affected month; or,

  2. Immediately cancel the former employee's or qualified beneficiary's sub-group participation and obtain a refund and/or credit from the insurer.

The qualified beneficiary's participation through the agency group should terminate the last day of the month for which the insurer receives full payment.

Medicare enrollment at the time of, or subsequent to, the qualifying event no longer disqualifies an otherwise qualified beneficiary from continuation coverage under the state's plan.

V. HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (HIPAA)

Pursuant to the provisions of HIPAA, health plans are required to: (1) limit the length of time during which coverage for pre-existing conditions may be excluded from group plans; (2) decrease the pre-existing coverage exclusion period by the amount of time the participant was covered by a prior plan, under certain conditions; and (3) provide evidence of prior health coverage and the duration of such coverage to plan participants upon the termination of coverage.

Pre-existing Coverage Exclusions:

Currently, none of the plans offered to state employees and retirees have any limitations on coverage for pre-existing conditions; therefore, no plan changes are necessary in order to comply with (1) and (2) above.

Notice of Prior Coverage:

In order to comply with (3) above, the health insurance carriers have agreed to provide the required notice of coverage and its duration to the plan participants once they are notified by the employing agency that the participant has terminated coverage. It is important that all agencies promptly notify the health insurance carriers upon the termination of coverage so that the plan may provide the required notice of coverage. Please be advised that the former health insurance carrier will issue notices of prior coverage to employees who change plans during open enrollment. Also, notices may be issued by the health insurance carriers during the pendency of the COBRA continuation coverage election to employees or dependents who lose coverage.

All questions or requests for assistance regarding health insurance should be directed to the Comptroller's Retirement & Benefits Division, at (860) 702-3535.

Very truly yours,

Nancy Wyman
State Comptroller

INITIAL COBRA NOTIFICATION
VERY IMPORTANT NOTICE
TO ALL STATE OF CONNECTICUT EMPLOYEES

It is important that all covered individuals take the time to read this notice carefully and be familiar with its contents.

Under federal law, the State of Connecticut is required to offer covered employees and covered family members the opportunity to elect a temporary continuation of health coverage at group rates, when coverage under the plan would otherwise end due to certain qualifying events. This notice is intended to inform you and your covered dependents, if any, in a summary fashion of your options and obligations under the continuation coverage provisions of the law.

Qualifying Events For a Covered Employee - If you are an employee of the State of Connecticut covered by a state-sponsored group health plan, you may have the right to elect this continuation coverage if you lose your group health coverage because of a termination of your employment or a reduction in your hours of employment.

For a Covered Spouse - If you are the spouse of an employee of the State of Connecticut and are covered under his or her state-sponsored group health insurance plan, you may have the right to elect continuation coverage if you lose such group health plan coverage for any of the following reasons:

  1. A termination of your spouse's employment or a reduction of your spouse's hours of employment with the State of Connecticut;
  2. The death of the your spouse; or
  3. Divorce or legal separation from your spouse

For Covered Dependent Children - If you are the dependent child of an employee covered by a state-sponsored group health plan, and are covered under the plan, you may have the right to elect continuation coverage if you lose such group health coverage for any of the following reasons:

  1. A termination of the employee's employment or reduction in the employee's hours of employment with the State of Connecticut;
  2. The death of the employee;
  3. Parent's divorce or legal separation; or
  4. You cease to be a "dependent child" under the group health plan.

If you are a child born or placed for adoption with a covered employee during the continuation coverage period, you may also elect continuation coverage.

Notification Requirements for Covered Employees, Spouses, and Dependents
Under the law, the covered employee, spouse, or other family member has the responsibility to inform the State of Connecticut of a divorce, legal separation, or a child losing dependent status under the state sponsored group health plan. This notification must be made within 60 days from the later of the date of the event or the date on which coverage would be lost because of the event. This notification must be made to your personnel or payroll office. Check the dependent eligibility rules of your plan carefully to determine when a child loses dependent status under the plan. If this notification is not completed in a timely manner rights to continuation coverage may be forfeited. Your agency has the responsibility to notify the COBRA Administrator of the your termination of employment, reduction in hours, or death.

Election Period Once your agency is notified that a qualifying event has occurred, it will in turn notify covered individuals (also known as qualified beneficiaries) of their right to elect continuation coverage. Each qualified beneficiary has an independent election right and will have 60 days from the later of the date coverage is lost under the group health plan or from the date of notification to elect continuation coverage. If a qualified beneficiary does not elect continuation coverage within this election period the right to elect continuation coverage will end.

If a qualified beneficiary elects continuation coverage and pays the applicable premium, the State of Connecticut is required to provide the qualified beneficiary with coverage that is identical to the coverage provided under the plan to similarly situated employees and/or covered dependents. If coverage is modified for similarly situated active employees, then continuation coverage may be similarly changed and/or modified.

Length of Continuation Coverage 18 Months. If the event causing the loss of coverage is a termination of employment or a reduction in employment hours, then each qualified beneficiary will have the opportunity to continue coverage for 18 months from the date of the qualifying event.

Disability Extension - The 18 months of continuation coverage can be extended to 29 months if the Social Security Administration determines that a qualified beneficiary was disabled during the first 60 days of continuation coverage according to Title II or XVI of the Social Security Act. It is the qualified beneficiary's responsibility to obtain this disability determination from the Social Security Administration and to provide a copy of the determination letter to the COBRA Administrator within 60 days of the date of determination and before the original 18 months expire. It is also the qualified beneficiary's responsibility to notify the COBRA Administrator within 30 days of a final determination by Social Security that the qualified beneficiary is no longer disabled.

Secondary Events - Another extension of the 18 month continuation period can occur, if during the 18 months of continuation coverage, a second qualifying event takes place (divorce, legal separation, death, Medicare entitlement, or a dependent child ceasing to be a dependent). If a second qualifying event does take place, then the 18 months of continuation coverage can be extended to 36 months from the date of the original qualifying event date. If a second event occurs, it is the qualified beneficiary's responsibility to notify the COBRA Administrator. In no event, however, will continuation coverage last beyond three years from the date of the event that originally made the qualified beneficiary eligible for continuation coverage.

36 Months. If the original event causing the loss of coverage was the death of the employee, divorce, legal separation, or a dependent child losing such status under the state-sponsored group health plan, then each qualified beneficiary will have the opportunity to elect continuation coverage for 36 months from the date of the qualifying event.

Eligibility, Premiums, And Potential Conversion Rights
A qualified beneficiary does not have to show that he or she is insurable to elect continuation coverage. You must be covered under the plan at the time of the qualifying event to be able to elect continuation coverage. The State, through its COBRA Administrator, reserves the right to verify eligibility status and terminate continuation coverage retroactively if an individual is determined to be ineligible or if there has been a material misrepresentation of the facts. A qualified beneficiary will have to pay all of the applicable premium plus a 2% administration charge for continuation coverage. The premium may change in the future when the premium for the active employee plan is changed. There is a grace period of 30 days for the regularly scheduled monthly premiums. At the end of the continuation coverage period, a qualified beneficiary must be allowed to enroll in an individual conversion plan if one is available.

Notification of Address Change To ensure that all covered individuals receive information properly and efficiently, it is important that you notify your personnel or payroll office of any address change as soon as possible. Failure on your part to do so may result in delayed notification or a loss of continuation coverage options.

Termination of Continuation Coverage The law allows continuation coverage to end prior to the maximum continuation period for any of the following reasons:

  1. The State of Connecticut ceases to provide any group health plan to any of its employees;
  2. Any required premium for continuation coverage is not paid in a timely manner;
  3. A qualified beneficiary becomes covered under another group health plan that does not contain any exclusion or limitation with respect to any preexisting condition of such beneficiary;
  4. A qualified beneficiary who extended continuation coverage due to a disability is determined by Social security to be no longer disabled.
  5. A qualified beneficiary notifies the COBRA Administrator that he or she wants to cancel continuation coverage.

Any Questions? - If any covered individual does not understand any part of this summary notice or has questions regarding the information or his or her obligations, please contact your personnel or payroll office.

Back to Comptroller's Home Page
Back to Index of Comptroller's Memoranda