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COBRA Insurance Definitions


30-month coordination period - A period of time when your employer group health plan will pay first and Medicare will pay second. This is called the 30-month coordination period. If you have COBRA during this time, COBRA will be your primary insurance during your 30-month coordination period. If your COBRA coverage ends before the 30 months have passed, Medicare becomes primary. If you still have COBRA when the 30-month coordination period ends, Medicare will pay first and your COBRA coverage may end

63 Day Break in Coverage - A period of 63 consecutive days in which an individual has no Creditable Coverage not counting Waiting Periods or Affiliation Periods.

ADA - Americans with Disabilities Act of 1990

Accidental Death and Dismemberment Plan - AD&D

Affiliation Period - The time an HMO may require you to wait after you enroll and before your coverage begins. HMO's that require an affiliation period cannot exclude coverage of pre-existing conditions under group health plans. Premiums cannot be charged during HMO affiliation periods. See also HMO.

Automatic Certificate of Creditable Coverage - The Certificate of Creditable Coverage required to be automatically furnished to each individual twice. Once when normal coverage terminates under the plan and again when COBRA coverage terminates.

Bundling - Combining two forms of insurance into one policy, for example vision and dental, or medical and dental. Commonly occurs with non core benefits. Life/AD&D, LTD, STD and FSA Dependent Care Reimbursement Accounts are excluded under COBRA, unless they are bundled with the group health plan.

Cafeteria Plan - A cafeteria plan is not a typical employee benefit plan. It does not provide benefits directly to employees; rather, it serves as a vehicle for employees to elect benefits under other plans and to finance their elections. Cafeteria plans must comply with the requirement in Code Section 125. Cafeteria plans give employees an opportunity to choose among a menu of benefits consisting of cash and certain nontaxable benefits (for example, health insurance benefits). In the simplest form of cafeteria plan, the employer contributes an amount to the plan that the employee can spend to buy various benefits. If the employer contribution exceeds the cost of the employee’s chosen benefits the employee may take the excess cash as additional taxable wages, assuming the plan allows such a cash-out option. If the employer contribution is insufficient to pay for the cost of the employee’s chosen benefits; the employee can reduce his salary to pay for the excess cost on a pre-tax basis.

CFR - Code of Federal Regulations

Core Benefits - Medical and prescription drug only.

CHAMPUS - Civilian Health and Medical Program of the Uniformed Services (known since March 1995 as TRICARE).

COBRA - Consolidated Omnibus Budget Reconciliation Act of 1985, which among other things established the health care continuation requirements that are found in ERISA, the Code and the PHSA. COBRA requires that if an employee or other “qualified beneficiary” loses employer-provided health coverage due to termination of employment or another specified triggering event, the group health plan must offer continued health care coverage to the qualified beneficiary. The qualified beneficiary may be required to pay the full cost for the coverage. This ‘COBRA Coverage” has limited duration. In most cases, the maximum COBRA period is 18 or 36 months from the date of the qualifying event.

Continuous Coverage - Health insurance coverage that is not interrupted by a significant lapse. When joining a health plan, coverage is considered continuous if there is not a break of 63 or more consecutive days. Employer waiting periods and HMO affiliation periods do not count as gaps in health insurance coverage for the purpose of determining if coverage is continuous.

Conversion Coverage - The insurance law of most states require health insurers to provide conversion coverage to employees or dependents that lose group insurance coverage that an employer has provided. Conversion coverage is individual insurance coverage, and typically costs more, and provides fewer benefits than does the group insurance coverage. COBRA requires a group health plan to provide the option of enrollment under a conversion health plan that is otherwise generally available under the plan during the last 180 days of the COBRA maximum coverage period.

Certificate of Prior Creditable Coverage (for HIPAA) - COPCC. The certificate that must be furnished under HIPAA by Group Health Plans and Health Insurance Issuers to individuals who lose coverage under employer-provided Group Health Plans. The certificate must be furnished automatically when normal coverage terminates and again when COBRA coverage terminates. The certificate must also be furnished upon written request made within 24 months after plan coverage terminates. The certificate documents the individual’s Creditable Coverage.

Covered Employee - An individual who is (or was) provided coverage under a group health plan by virtue of the performance of services by the individual for 1 or more persons maintaining the plan. Covered employee includes retirees, independent contractors, self-employed persons and partners of a partnership.

Creditable Coverage - The period of an individual’s coverage under a Group Health Plan, health insurance, Medicare of any one of several other specified health plans or health insurance sources that is not interrupted by a 63 day break in coverage.

Dangerous Activities Exclusion or Limitation - A plan provision that makes individuals who engage in dangerous activities ineligible for coverage or a plan provision that excludes coverage for injuries caused by engaging in dangerous activities.

Department of Health and Human Services - DHHS

Disclosure - Typically refers to the various disclosure obligations imposed by ERISA on employee welfare benefit plans, including provisions of Summary Plan Descriptions and Summaries of Material Modification.

Department of Labor - DOL A department of the federal government that regulates employer provided health benefit plans. You may need to contact the Department of Labor if you are in a self-insured group health plan, or if you have questions about COBRA or the Family and Medical Leave Act

EAP - Employee Assistance Plan

EEOC - The United States Equal Employment Opportunity Commission. This commission is responsible for the investigation of ALL discriminatory matters covered by Title VII of the Civil Rights Act, Age Discrimination Act, Americans With Disabilities Act, Sexual Harassment Laws and other similar discriminatory matters. It may also bring a case on behalf of a victim of such acts.

Election form - Form used to enroll in the cobra plan, listing things such as qualifying events, contact information, beneficiaries, start date, end date, etc.

Eligible Individual - Relevant for HIPAA’s Individual Market Insurance Rules that apply to Health Insurance Issuers, the term generally means an individual with 18 or ore months of Creditable Coverage who has exhausted available COBRA (and/or state law) coverage.

End-Stage Renal Disease (ESRD)
 - Permanent kidney failure requiring dialysis or a kidney transplant. People of any age with End-Stage Renal Disease (ESRD) qualify for Medicare.

Elimination Rider - A feature permitted in individual health plans that excludes coverage for a specific health condition, body part, or body system. Unlike pre-existing condition exclusion periods, which can be no longer than 12 months, elimination riders can last indefinitely. Individual health plans can look back 3 years for evidence of a health problem. You can apply to have an elimination rider modified or removed, but the health plan is not obligated to do so.

Enrollment Date - With respect to any individual covered under a Group Health Plan, the date of enrollment or, if earlier, the first day of the Waiting Period for such enrollment.

Enrollment Period - The period during which all employees and their dependents can sign up for coverage under an employer group health plan. Besides permitting workers to elect health benefits when first hired, many employers and group health insurers hold an annual enrollment period, during which all employees can enroll in or change their health coverage. See also Group Health Plan, Special Enrollment Period.

Entitlement - a guarantee of access to benefits because of rights, or by agreement through law..

EOI - Evidence of Insurability

ERISA - ERISA is the Employee Retirement Income Security Act of 1974, as amended. ERISA is a federal law governing the administration, supervision, and management of health and welfare plans, as well as pension plans.

Federally Eligible - Status you attain once you have had 18 months of continuous creditable health coverage. To be federally eligible, you also must have used up any COBRA or state continuation coverage available to you; you must not be eligible for Medicare, Medicaid, or a group health plan; you must not have other health insurance; and you must apply for individual health insurance within 63 days of losing your prior creditable coverage. When you are buying individual health coverage, federal eligibility confers greater protections on you than you would otherwise have.

Fee-For-Service (FFS) Plan - Health plan that allows the enrollee to choose which doctors and hospitals to use without requiring or providing incentives for the enrollee to use a network of doctors and hospitals. FFS plans are more costly than managed care plans such as HMO's and PPOs.

First Day of Coverage - Term used in interim regulations in place of Date of Enrollment to clarify that the Look Back Rule operates from the date of actual enrollment (or if earlier, the beginning of the waiting period) rather than the date an enrollment application is completed.

Form 5500 - The annual information return required to be filed by many ERISA employee benefit plans and by cafeteria plans and educational assistance plans, using the Form 5500 series. Also known as the Annual Report.

FMLA - Family and Medical Leave Act of 1993. A federal law that guarantees up to 12 weeks of job-protected leave for certain employees when they need to take time off due to serious illness, to have or adopt a child, or to care for another family member. When you qualify for leave under FMLA, you can continue coverage under your group health plan. The FMLA generally applies to employers with 50 or more employees. Though it does not amend the COBRA provisions in ERISA, the PHSA or the Code, it requires employers to permit employees to take up to 12 weeks of Family Medical Leave a year and to continue to provide health benefits during the leave.

FSA - Flexible Spending Account. A health FSA is a “medical reimbursement” plan that is a “flexible spending arrangement.” Example: A cafeteria plan permits participants to elect coverage under a medical reimbursement plan with an annual limit of up to $1,200 and to pay for that coverage with pre-tax salary reduction dollars. The plan reimburses employees for medical and dental expenses not otherwise reimbursed by the employer’s group health plan (e.g., co pays, deductibles, eyeglasses, orthodontia). A participant who elects the maximum $1,200 of coverage must reduce his/her annual taxable wages by $1,200 (his/her annual premium) to pay for the coverage. This medical reimbursement plan is a flexible spending arrangement. The maximum amount of reimbursement available for a plan year ($1,200) is equal to 100% of the annual premium ($1,200), which is far less the and 500% threshold contained in Q/A-7(c) of Proposed Treasury Reg. 1.125-2 (1989).

Fully Insured Group Health Plan. - Health insurance purchased by an employer from an insurance company. Fully insured health plans are regulated by state governments.

GTL - Group Term Life Plan

Group Health Plan - A plan sponsored by an employer, union or professional association that covers at least 2 employees and can be insured or self-insured.

Guaranteed Issue - A requirement that health plans must permit you to enroll regardless of your health status, age, gender, or other factors that might predict your use of health services. By federal law, all health plans sold to small employers are guaranteed issue. Plans that are guaranteed issue can turn you away for other reasons.

Guaranteed Renewable - A feature in most health plans that means your coverage cannot be canceled because you get sick. HIPAA requires health insurance to be guaranteed renewable. Your coverage can be canceled for other reasons unrelated to your health status.

Health Coverage Tax Credit (HCTC) - a program that can help pay for nearly two-thirds of eligible individuals' health plan premiums. In general, in order to be eligible for the health coverage tax credit, you must be 1) receiving Trade Readjustment Allowance benefits (TRA), or 2) will receive TRA benefits once your unemployment benefits are exhausted, or 3) receiving benefits under the Alternative Trade Adjustment Assistance (ATAA) program, or 4) aged 55 or older and receiving benefits from the Pension Benefit Guaranty Corporation (PBGC).

Health care provider - Include providers who render medical care and are recognized by the Federal Employees Health Benefits Program, certified under Federal or State law, recognized as a Native American "traditional healing practitioner," or who practice in a foreign country.

Health Insurance - Benefits consisting of medical care (provided directly or through insurance or reimbursement) under any hospital or medical service policy, plan contract, or HMO contract offered by a health insurance company or a group health plan. Excludes accident or disability income insurance, workers compensation, automobile insurance with medical coverage, coverage for on-site medical clinics or dental or vision benefits.

Health Plan Year - That calendar period during which your health plan coverage is in effect. Many group health plan years begin on January 1, while others begin in a different month.

HIPAA - Health Insurance Portability and Accountability Act of 1996. Generally, HIPAA restricts the use of preexisting condition exclusions, creates special enrollment periods and prohibits discrimination based on health-status related conditions in enrollment and premiums. HIPAA also creates an obligation for most group health plans or their insurers to provide certificates of creditable coverage to individuals who ceased to be covered by a group health plan. Administration of the certificate requirements is often coordinated with administration of COBRA. Because HIPAA requires a certificate to be issued not only when coverage first ceases, but also when COBRA coverage ceases, HIPAA effectively creates a new notice requirement in COBRA administration when COBRA coverage expires or is terminated.

HSA Health Savings Accounts are a tax-exempt trust or custodial account established exclusively for the purpose of paying qualified medical expenses of the account beneficiary who, for the months for which contributions are made to an HSA, is covered under a high-deductible health plan. They are not subject to COBRA.

HMO - Health Maintenance Organization. HMOs usually limit coverage to care from doctors who work for or contract with the HMO. They generally do not require deductibles, but often do charge a co payment for doctor visits or prescriptions. If you are covered under an HMO, the HMO might require an affiliation period before coverage begins.

Individual Health Plan - Private policies purchased by the self-employed, unemployed or people that have no group health insurance for themselves (or their family members).

IRC - Internal Revenue Code, Title 26

Large Group Health Plan - One with more than 50 eligible employees.

Late Enrollee - An individual who enrolls in a plan after the first available enrollment period but not including an individual who is a Special Enrollee. Late enrollees may be subject to a longer pre-existing condition exclusion period.

Lay-Off - A Lay-Off is an employment decision where the employer makes the decision not to replace a position and the reduction occurs because of financial considerations. A Lay-Off is not a discharge.

Leave Entitlement - Office of Personnel Management regulations clarify that an employee must invoke his or her entitlement to Family and Medical Leave Act (FMLA) leave, subject to the notification and medical certification requirements. An employee may not invoke entitlement to FMLA leave retroactively for any previous absence from work

Look Back Rule - One of the restrictions of Preexisting Condition Exclusions imposed by HIPAA under which such exclusions are limited to conditions for which medical advice, diagnosis, care or treatment was recommended or received within the six-month period prior to the Enrollment Date. Also The maximum length of time, immediately prior to enrolling in a health plan, that can be examined for evidence of pre-existing conditions.

LTD - Long Term Disability

Medicaid - A state program providing comprehensive health insurance coverage where eligibility levels and covered benefits vary.

Medically necessary - Services or supplies that are proper and needed for the diagnosis, direct care, or treatment of your medical condition, meet standards of good medical practice, and are not mainly for the convenience of you or your doctor.

Medicare - A federal government program that pays for services and supplies it considers "medically necessary"

MEWA - Multiple Employer Welfare Arrangement

MHPA - Mental Health Parity Act

NAIC - National Association of Insurance Commissioners

NMHPA - Newborns’ and Mothers’ Health Protection Act of 1996.

None core benefits - dental, and vision, EAP and FSA Medical Reimbursement.

Nondiscrimination - A requirement that group health plans not discriminate against you based on your health status. Your coverage under a group health plan cannot be denied or restricted, nor can you be charged a higher premium, due to your health status. Group health plans can restrict your coverage based on other factors (such as part time employment) that are unrelated to health status.

Nondiscrimination Rules Under HIPAA - Rules added by HIPAA that prohibit a Group Health Plan from discriminating with regard to eligibility or premiums or contributions based on any enumerated “health status-related factor,” including medical condition or history, disability or genetic information.

PCE - Preexisting Condition Exclusion

PHSA - Public Health Service Act. The PHSA contains the provisions of COBRA that govern continuation coverage under government-sponsored group health plans.

Plan Administrator - Either the person or entity named as plan administrator in the plan instrument, or, if no one is named, the plan sponsor. (For private sector plans under ERISA, the Department of Labor may designate a plan administrator.) The employer or the qualified beneficiary or the covered employee, depending on the nature of the qualifying event, must notify the plan administrator when a qualifying event occurs. The plan administrator, in turn, must notify any qualified beneficiary of his or her rights under COBRA.

Plan Sponsor - The plan sponsor of a single-employer plan is the employer. In plans maintained by two or more employers or by one or more employee organizations, the plan sponsor is the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan. Under COBRA, a plan sponsor has the obligation to provide COBRA coverage.

Portability - An employee’s ability to carryover plan coverage from one employer to the next. HIPAA does not provide for such portability, but approximates portability by requiring that employees receive credit for prior coverage against any new plan’s preexisting condition exclusion.

PPO - Preferred Provider Organization. A type of managed care plan that will cover more of your medical expenses when you use a health care provider such as a doctor or a hospital that is part of the PPO network. When you use a provider outside the network, the health plan will cover less of the costs.

Pre-existing Condition - Any condition (either physical or mental) for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period immediately preceding enrollment in a health plan. - Group health plans cannot count pregnancy as a pre-existing condition. Genetic information about your likelihood of developing a disease or condition, without a diagnosis of that disease or condition, cannot be considered a pre-existing condition. Newborns, newly adopted children, and children placed for adoption covered within 30 days cannot be subject to pre-existing condition exclusions.

Pre-existing Condition Exclusion Period - The time during which a health plan will not pay for covered care relating to a pre-existing condition. See also Pre-existing Condition.

PWBA - Pension and Welfare Benefits Administration

Qualified Beneficiary - Individuals who are allowed to continue coverage based upon certain "qualifying events".

Qualifying event - A the loss of coverage under a group health plan on account one of the specific events described in COBRA:

Requested Certificate of Creditable Coverage - The Certificate of Creditable Coverage required to be furnished to each individual upon written request made within 24 months after plan coverage terminates. The certificate documents the individual’s Creditable Coverage.

Self-Insured Group Health Plans - Plans set up by employers who set aside funds to pay their employees’ health claims. Because employers often hire insurance companies to run these plans, they may look to you just like fully insured plans. Employers must disclose in your benefits information whether an insurer is responsible for funding, or for only administering the plan. If the insurer is only administering the plan, it is self-insured. Self-insured plans are regulated by the U.S. Department of Labor.

Serious health condition - Via the Department of Labor's (DOL's) regulations, includes chronic conditions, such as asthma, diabetes, and conditions requiring multiple treatments, such as chemotherapy or kidney dialysis.

Small Group Health Plans - Plans with at least 2 but not more than 50 eligible employees.

SPD - Summary Plan Description - A summary plan description is an ERISA-required summary of the terms of an employer sponsored “welfare benefit plan” that must be furnished to all participants and COBRA beneficiaries.

Special Enrollment - A time, triggered by certain specific events, during which you and your dependents must be permitted to sign up for coverage under a group health plan. Employers and group health insurers must make such a period available to employees and their dependents when their family status changes or when their health insurance status changes. Special enrollment periods must last at least 30 days. HIPAA requires Group Health Plans to offer special enrollment rights to certain un enrolled employees and dependents when they experience a mid-year loss of other coverage and when there is a mid-year adoption, birth or marriage.

Special Enrollment Period - A time, triggered by certain specific events, during which you and your dependents must be permitted to sign up for coverage under a group health plan. Employers and group health insurers must make such a period available to employees and their dependents when their family status changes or when their health insurance status changes. Special enrollment periods must last at least 30 days. Enrollment in a health plan during a special enrollment period is not considered late enrollment. See also Late Enrollment.

Spouse - Under the Defense of Marriage Act (Public Law 104-199, September 21, 1996). "Spouse" means an individual who is a husband or wife pursuant to a marriage that is a legal union between one man and one woman, including common law marriage between one man and one woman in States where it is recognized.

State Continuation Coverage - A program similar to COBRA for people who used to receive health benefits from a small employer with fewer than 20 employees.

Stop-Loss Insurance - Coverage purchased by self-funded medical plans or plan sponsors to cover claims over a certain amount, on an individual or aggregate basis. The coverage protects the employer in most situations and does not make the medical plan itself insured for purposes of ERISA. Also called “excess insurance” or “reinsurance.”

Supplemental Security Income (SSI) - A program providing cash benefits to certain very low income disabled and elderly individuals. When you qualify for SSI, you generally also qualify for Medicaid. In addition, Medicaid coverage often continues for a limited time if your income increases so that you no longer qualify for SSI.

Temporary Assistance for Needy Families (TANF) - A program that provides cash benefits to low income families with children. When you qualify for TANF, you generally also qualify for Medicaid. In addition, Medicaid coverage often continues for a limited time or longer if you no longer qualify for TANF.

Waiting Period - The time you may be required to work for an employer before you are eligible for health benefits. Not all employers require waiting periods. Waiting periods do not count as gaps in health insurance for purposes of determining whether coverage is continuous. If you employer requires a waiting period, your pre-existing condition exclusion period begins on the first day of the waiting period.
Written by Craig J. Casey

Craig Casey is an Writer, Coach, Blogger, Husband, and Former Health Insurance Agent helping people on the web since 1999 with their health insurance problems.

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