A federal law known as COBRA (short for the Consolidated Omnibus Budget Reconciliation Act of 1985) guarantees that the employer of the deceased officer must make available to the surviving spouse and their dependent children the same type of health insurance as was provided prior to the officer’s death. Coverage is available for up to 36 months and must be paid by the surviving insured. There is no provision in the law for the employer to pay for the health insurance.
COBRA eligibility also extends to workers in state and local government, as well as to workers classified as independent contractors. However, the law grants an exemption to the District of Columbia, federal employees, certain church-related organizations and firms employing fewer than 20 people. The IRS has said that employers must figure part-time workers into their employee total to determine if they can claim exemption. Employers with self-funded health plans (generally large corporations) are exempt from state regulation of their plans. Employers that are exempt from federal law because of the number of employees may fall under a state law, sometimes known as "mini-COBRA" that grants broader rights in determining eligibility for coverage. Check with your state insurance department to find out if you are entitled to continued health-care coverage under a state COBRA plan.
Remember that the deceased officer and the survivors must have actually been covered under an employee health plan at the time of the death to be eligible for COBRA.
Coverage offered under COBRA must be identical to the coverage prior to the death. However, employers CAN offer to let the survivors drop such non-core benefits as dental and vision care to reduce the premium cost. Additionally, if the employer changes its health insurance plan for its current employees, survivors who elected coverage under COBRA will receive the benefits of the new plan. If the COBRA recipient relocates out of the COBRA health plan’s coverage area, COBRA benefits will be lost as the employer is not required to offer a plan in the new area. Premiums under COBRA can be increased only if the cost of the health plan increases for everyone at the workplace and the plan must allow that the premiums can be paid on a monthly basis.
To begin COBRA, the employer must notify the health plan administrator within 30 days after the employee’s death. The plan administrator then has 14 days to contact the survivor to explain and offer the COBRA coverage. The decision whether or not to buy COBRA must be made within 60 days of this notification. COBRA coverage will be retroactive to the day that benefits ceased because of the death provided the premiums are paid. If COBRA is elected, the first premium must be paid within 45 days. Successive payments are due according to health plan requirements, but COBRA rules allow a 30-day grace period after each due date for payment.
The US Department of Labor has jurisdiction over issues involving notification of private- sector employees about COBRA coverage. Employers who fail to comply with notification rules face fines of up to $110 for every day that no notice is sent after the deadline.