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Employees who have had their benefits terminated due to the end of their employment with a Justworks company are eligible for COBRA Coverage.
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law which gives workers and their families (“qualified beneficiaries”) the opportunity to continue their group health benefits provided by the employer’s group health plan for certain specified periods of time in the event that they lose coverage under the plan as a result of certain qualifying events.
How does it work with Justworks?
When an employee’s separation is scheduled in the Justworks platform, it triggers a notification to our COBRA administrator. When employees on Justworks employment ends, their benefits coverage will expire on the first day of the following month. For example, if someone leaves a company on June 15th, their benefits coverage will remain active through June 30th.
Shortly after their separation is processed in Justworks, the employee will receive a physical packet from our COBRA administrator in the mail. The packet will be sent to the employee’s home address that’s listed in the system, so it’s important to ensure that the information in their Justworks account is correct.
This packet contains information regarding rights to COBRA coverage, how to make an election, the name of the plan’s COBRA administrator, and how to obtain additional information. Separated employees will also be able to enroll in COBRA online, by going through our provider's online portal.
COBRA is a continuation of the current coverage that employees are enrolled in, so they will only be allowed to elect the same plans they previously had. They may be able to continue their coverage via COBRA at the same or lesser tier of coverage. Employees cannot enroll in COBRA at higher coverage than they previously had, or enroll dependents that were not on the plans at the time that they became COBRA eligible. They can only make these changes during the health insurance renewal period in October.
Should a separated employee choose to enroll in COBRA coverage within the election period, the coverage will be effective retroactive to the first day after which their benefits expired. This ensures that there are no lapses in coverage. Unless their now-former employer wishes to contribute to the plans, the separated employee will be responsible for the full cost of the premium, plus a 2% administration fee. Employees on COBRA will also be able to set up automatically recurring payments through our provider's online portal.
To learn more about how to enroll in COBRA please see our Terminated Employees article.
How does my COBRA plan renew at the end of the plan year?
Justworks' health insurance plans run from November 1st to October 31st. In October employees on COBRA coverage will receive renewal packets in the mail via Wageworks. The notices will include the plan names, monthly premiums, and enrollment instructions. These can also be viewed in the employee's Wageworks portal. Participants can enroll via the paperwork included in their physical Open Enrollment Notice or they can enroll online in their WageWorks portal. Participants will be able to change plans or add/drop dependents during COBRA renewals open enrollment period, just as they would during regular open enrollment. The participant will have a set amount of time to make these elections. If no election is made COBRA plans will be canceled.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.