School administrators often have questions when it comes to managing the health benefits of a departing employee. Many want to help protect the long-term health of their colleagues who leave the school, while still following the appropriate rules and procedures.
We’re happy to shed some light on this issue. If your school has at least 20 full-time equivalent employees, you must offer former employees and their applicable dependents COBRA coverage for their health insurance, including medical, dental, and vision, along with a health reimbursement arrangement and/or health flexible spending account.
However, some states require that even employers with fewer than 20 employees offer COBRA benefits. It is up to the employee and their dependents, if applicable, to select or decline it.
If your former employees and any applicable dependents decline COBRA coverage, they may decide to enroll in a Marketplace plan. The loss of group health insurance provides an individual with a special election period to enroll in Exchange coverage.
The former employee and dependents must show proof of eligibility for this special election. The proof can be documented with their COBRA notice or they may request a letter from your school stating that they lost the coverage.
If your former employee is 65 or older, he or she has a special election period of eight months to enroll in Medicare Parts A and B. The former employee can also select COBRA—but COBRA is not group health insurance.
If he or she does not enroll in Medicare in the eight-month special election period, the former employee will only be allowed to enroll in Medicare during the general enrollment period (January 1—March 31 for coverage starting July 1).
If he or she goes 12 months without coverage, the former employee can face a lifetime penalty when enrolling in Medicare Part B.
While you cannot tell employees what to do, understanding their options—and the school’s responsibility—is vital. Be informed and provide any materials needed to help make the transition as smooth as possible.
We hope you found this information helpful! If you have any questions, please don’t hesitate to reach out to our Affordable Care Act Specialist. We respect your privacy. You can also view ISM’s health care solutions here.
Additional ISM Resources:
The Source for Business and Operations Vol. 16 No. 7 Ensure Your Long Term Disability Benefits Are Right for Your Community
The Source for Business and Operations Vol. 16 No. 3 The Benefits That Millennials Really Want
