Kids and Health Care: Qualifying for Cobra

Both you and your former employer need to follow proper procedure to initiate COBRA, or else you could forfeit your rights to coverage.

The employer must notify its health plan administrator within 30 days after an employee -- or the employee's family -- becomes eligible for COBRA coverage. A "qualifying event" can be any of the following:

• resignation;
• termination;
• death (of the employee);
• reduced hours of employment; or
• eligibility for Medicare.

In cases of divorce, legal marital separation or a child's loss of dependent status, it is you or your family's responsibility to notify the health plan administrator within 60 days of the event.

Once notified, the plan administrator then has 14 days to alert you and your family members -- in person or by first-class mail -- about your right to elect COBRA. The Feds get tough here: If the plan administrator fails to act, he or she can be held personally liable for breaching the duties. However, the plan administrator must have your correct mailing address. If you move, it's your (or your family's) responsibility to tell the health plan administrator.

You and your family members then have 60 days to decide whether to buy COBRA coverage. This election period is counted from the date your eligibility notification is sent to you or the date that you lost your health coverage, whichever is later. Your COBRA coverage will be retroactive to the date that you lost your benefits (as long as you pay the relevant premiums).

During the election period when you have to choose whether to buy COBRA, you might initially decide not to...and then change your mind. As long as the election period hasn't expired, you can change your mind and choose the coverage -- and the COBRA coverage would start on the day you notified the plan administrator that you wanted in.

In insurance and human resources jargon, choosing not to use COBRA coverage is called "waiving coverage" and changing your mind is called "revoking the waiver."

If you first say you don't want COBRA coverage, then decide that you do, you may be liable for any medical costs that your family incurred in the interim. On the other hand, if you say nothing and then choose to take the coverage on the last day you can, you'll usually have coverage retroactive to the first day you were eligible. So, there's no reason to rush your decision.