November 30, 2016
Many questions arise when an employee leaves the company, with some of the most confusing and sensitive centered around their rights to continued health insurance benefits. Illinois employees who were actively participating in the company group plan, are entitled by law to receive ongoing medical, dental, vision and HRA benefits. Whether you're an HR professional or the owner of the company, making sure the process is handled properly can save you a lot of time and unnecessary stress.
Here are a few things to keep in mind when preparing to offer continued health benefits after an employee leaves or is terminated.
Continuation Requirements by Group Size
The type of continuation coverage you offer will depend on the number of people you employ. Groups with 20 or fewer employees enrolled would offer IL Continuation Coverage for up to 12 months. Businesses with 21 or more employees would offer the more comprehensive COBRA coverage, which can be extended for a period of up to 18 months.
A common mistake is waiting too long, or worse, not sending out any notification at all. To be safe, make sure that COBRA or IL Continuation documents are sent out soon after employment is ended, and no later than the last day of the month in question. The employee will need to return their election form and payment within one month for under-20 group continuation, and within two months for COBRA.
Continuation Time Limits
As mentioned briefly, continued health insurance benefits are not indefinite. In the case of IL Continuation coverage, medical and other applicable group plan benefits can be extended for a full calendar year. COBRA, however, allows up to 18 months of ongoing coverage. If coverage overlaps a rate renewal, the former employee's premiums could change and you will need to mail a notification letter in advance.
A perk for employers is that you will not need to send out ongoing reminders or invoices each month. As emphasized in the original notification packet, the former employee is responsible for ensuring that premium payments are mailed and received by the first of the month, or other specified dates. Certified mail is strongly recommended for all continuation forms.
COBRA and Continuation Renewals
Depending on when your former employee begins receiving COBRA or Continuation benefits, their premium is only good until the next group renewal date. In Illinois this happens most frequently in December. Be sure to let your agent know of any former staff enrolled in continuation coverage, so they can adjust your quote for a more precise renewal. In the case of premium increases or decreases, you or your HR team will need to make sure a certified letter is sent out explaining this is detail, and providing any instructions needed.
The above, of course, represents some of the main issues associated with offering former employees extended group healthcare benefits. Others include providing continuation for subsidy employees, retirees, consultants and more.
Need More Info or Resources on COBRA and IL Continuation
Whether you're a new business or new to offering group health insurance, it can be helpful to have an honest, knowledgeable agent on call. Premier is located in Lisle and can help with everything from new employee benefits and COBRA forms, to general inquiries on process and other more specific concerns.
Call and speak with one of our agents today at 800-369-0287, or send us an e-mail through our website's secure contact forum.