Continuation of Healthcare Coverage After Furlough

Prepared by ALPA R&I Dept

In the event of furlough, unless otherwise provided under your collective bargaining agreement, you should expect that your eligibility for healthcare coverage will terminate as of your last day of active service. For example, the plan may provide that coverage stops at the end of the month, or the CBA may provide that coverage continues at active pilot rates during any period that you are receiving furlough pay, or for other periods of time. 

If you are married, and your spouse has access to group healthcare coverage, or you have access to other group health plan coverage through other employment, you may be eligible to enroll in that other group health plan provided you do so within the required timeframe, addressed in the FAQs below. Your other options include coverage that may be available through Affordable Care Act marketplace offerings in your state, or continuation of your employer-sponsored coverage under COBRA, as discussed below.

COBRA is the federal law that allows employees and their dependents to elect to continue their healthcare coverage under certain circumstances that would otherwise result in the loss of such coverage. Furlough is an event that would entitle you to elect continuation of your healthcare coverage under COBRA.

The FAQs below provide a general summary of your rights under COBRA, and the deadlines applicable to exercising such rights. In light of the current National Emergency, regulations provide for a mandatory extension of these deadlines during the “Outbreak Period”. The “Outbreak Period” is defined as the period beginning March 1, 2020 and ending 60 days after the end of the COVID-19 National Emergency (or a later date that may subsequently be announced).

The FAQs below incorporate the extensions required under the new regulations. Please note that these FAQs are not intended to be all-inclusive. More detailed information will be provided by your employer if you are furloughed. In addition, you may access Federal Regulations under COBRA at IRS Regulations 54.4980B-0 through 54.4980B-10.

Q1: What healthcare coverage can I continue under COBRA?

You may elect to continue coverage under any or all Health Plans in which you were covered immediately before your furlough. Health Plans include the following:

• Medical plans
• Dental plans
• Vision plans
• Healthcare flexible spending account plans

Q2: How long may I continue Health Plan coverage under COBRA?

You may continue Health Plan coverage under COBRA for a period of eighteen (18) months from the date of your furlough. (This 18-month period may include any period that your employer automatically extends coverage to you at active pilot rates.) Continuation may extend beyond the 18-month period if certain other events, such as divorce or disability, occur during this period. Your continued coverage may terminate sooner than 18 months if you do not pay your premiums on a timely basis, if you become covered under another Health Plan, including Medicare, or if your airline ceases to provide any group Health Plan (including successor plans) to any employee, such as in the event of cessation of operations.

Q3: How much will I have to pay if I elect to continue my Health Plan coverage under COBRA? 

Your employer may charge up to 102% of the monthly “premium” for continuing your Health Plan coverage under COBRA (the “COBRA rate”). For self-insured medical and dental plans, the “premium” is the actuarial estimate of the monthly cost of providing the same coverage to active pilots and their dependents. For insured plans, including HMO's, the "premium" is the cost of providing the same coverage to the employer’s active pilots. For healthcare flexible spending account plans, the “premium” is the amount of pre-tax contributions that you were making to your account before your furlough, plus the contributions from your employer, if any. The COBRA notice from your Employer will contain specific information on the COBRA rates for the Health Plans in which you were enrolled before your furlough. Your employer may increase the COBRA rate applicable to your Health Plans in the future, up to once a year, but only as needed to reflect an actual increase in the monthly cost of providing the same coverage to active pilots.

Q4: Must my employer give me notice of my rights under COBRA?

Yes. Your employer has up to 30 days from the date you lose coverage under a Health Plan to notify the plan administrator, and the plan administrator then has up to 14 days to notify you of your right to continue your Health Plan coverage – a total of 44 days. For this purpose, you lose coverage under a Health Plan as of your furlough date, except if your employer extends coverage automatically at the same cost to you as before furlough, in which case you lose coverage under that Health Plan when the automatic extension ends. The new regulations extend the time the employer has to provide the COBRA notice to 44 days after the end of the Outbreak Period (defined above).

Example:

• Assume the National Emergency ends June 30, 2020, and thus 60 days thereafter, the Outbreak Period ends on August 29, 2020.
• The plan will have until 44 days after the end of the Outbreak Period, which is October 12, 2020, to provide the COBRA election notice.

Q5: Once I receive my COBRA notice, how long do I have to submit my election to continue Health Plan coverage?

Under the general COBRA rules, you have 60 days from the date you lose Health Plan coverage as a result of your furlough (or from the date of the COBRA notice, if later) to submit your election to continue your Health Plan coverage. Note that you are not considered to have “lost coverage” for this purpose until you are no longer able to continue coverage at active pilot rates. The standard 60-day election period is now extended by disregarding the Outbreak Period.

Example:

• Assume the National Emergency ends June 30, 2020, and thus 60 days later, the Outbreak Period ends on August 29, 2020.
• You would have until October 28, 2020, which is 60 days after the end of the Outbreak Period, to elect COBRA.

Q6: Should I submit my election immediately to ensure that my coverage under the Health Plan continues?

If you and your covered dependents are in good health, and you expect to be recalled or have other group health plan coverage before the election period ends, you need not rush to make an election as soon as you receive your notice. Remember that you can submit your election at any time during the election period, and once submitted, your coverage under the Health Plan is retroactive to the date you lost coverage (provided the required retroactive premiums are timely paid). Therefore, if you were suddenly faced with a medical emergency, and you are still within your election period, you could simply elect COBRA at that time, make the necessary retroactive premium payments, and have your Health Plan coverage reinstated retroactively. Any claims that may have previously been denied during the election period would be reprocessed.

Q7: If I elect to continue my Health Plan coverage, when do I have to pay for the coverage?

You have 45 days from the date you submit your election to pay the premium for the period beginning on the date your Health Plan coverage ended through the date you submit the election (the “initial premium”). The sooner you make your election, the sooner your initial premium will be due. Depending on the timing of your election, payment for the balance of the month in which you submit your election will also be due. Monthly payments will be due thereafter, but you have a 30-day grace period before Health Plan coverage may be terminated. The new regulations extend the 45-day period for paying the initial (retroactive) premium payment, as well as the 30-day grace period for subsequent payments, by disregarding the Outbreak Period. The plan may not deny coverage during this interim period, and retroactive payments will be made for any benefits and services you may have received during this time after you make the required COBRA payments.

Example 1:

• You’ve already made an election to continue coverage under COBRA, and you make the required payments through June 2020. However, you do not make your required payments for July, August, and September within the standard 30-day grace period provided by the plan.
• The standard 30-day grace period is extended by disregarding the Outbreak Period.
• Assuming the National Emergency ends June 30, 2020, and thus 60 days later, the Outbreak Period ends on August 29, 2020, your COBRA payment for July, August, and September will be considered timely if made by October 28, 2020, which is 30 days after the end of the Outbreak Period.

Example 2:

• You make your election to continue coverage under COBRA on June 1, 2020, but as of September 30, 2020, you have not yet made your initial (retroactive) premium payment.
• The standard 45-day period for making the initial COBRA premium payment is extended by disregarding the Outbreak Period.
• Assuming the National Emergency ends June 30, 2020, and thus 60 days later, the Outbreak Period ends on August 29, 2020, you have until October 13, 2020 to make your initial premium payment for the period June 1 through September 30, and you have 30 days thereafter to make the subsequent payment.
• If, by October 13, 2020 (the required due date for the initial retroactive premium in this example) you make payment for only two months of coverage, those premiums would apply to the first two months that were unpaid – June and July – and you would not have COBRA coverage for any month after July.

Q8: I received my COBRA notice and election form and intend to wait a while before submitting my election. What is the status of my Health Plan coverage?

Technically, you should consider your Health Plan coverage terminated as of your furlough date, or if later, at the end of any period during which you continued to pay active pilot rates for coverage. However, if a healthcare provider calls the Health Plan administrator to verify your coverage during your COBRA election period, the provider is supposed to be told that you are in your COBRA election period. As discussed in Q5, your COBRA election period is now extended until 60 days following the end of the Outbreak Period.

Q9: If I decide to hold off making an election and someone in my family gets sick, should I immediately make an election to reinstate my Health Plan coverage?

Remember, your 60-day election period and the 45-day clock on making your initial premium payment does not start running until after the end of the Outbreak Period (see Q5 and Q7). If the cost of the required care is less than the retroactive premium that will be due, you might consider whether it makes more sense to pay the cost out-of-pocket and continue to hold off submitting your election. Remember, however, that you cannot hold off submitting your election beyond the 60-day election period that begins after the Outbreak Period ends.  If the cost of the required care is greater than the premium payment would be, or if you are faced with inpatient hospital charges, for example, you may wish to make your election immediately to reinstate your Health Plan coverage and ensure claims are paid as incurred. Otherwise, the plan need not pay claims until you make the required premium payments.

Q10: What if I hold off making my election and I get other Health Plan coverage before the 60-day election period expires?

If you become covered under another Health Plan during the election period and you had no claims before the new coverage took effect (or any costs you incurred are less than the COBRA premium for the period), it may not be necessary for you to make a COBRA election. However, you should make certain that there is no waiting period under the other Health Plan before it becomes effective. 

Caution: If you were enrolled in an HMO prior to your furlough, the use of HMO services by you or your covered dependents during the election period may be construed as an affirmative election to continue your coverage under COBRA.

Q11: What should I do about submitting my election if the election deadline approaches and I do not have other Health Plan coverage available to me?

If you are not covered under another Health Plan before the end of the election period, as extended, you should consider submitting your election to continue your Health Plan coverage before the deadline.

Q12: Once I submit an election to continue my Health Plan coverage, should I pay the retroactive premium immediately?

That depends on whether you have incurred any expenses up to that point. Your employer is not required to reinstate your Health Plan coverage, even after you submit an election, until you have paid the required initial premium. But that initial premium is not due until 45 days after you submit the election. Even if you make your election during the Outbreak Period, you will still have 45 days after the end of the Outbreak Period to make your initial premium payment (see Q7).

Q13: What if I don’t pay the premium after submitting an election because I find other, less expensive, Health Plan coverage elsewhere?

If you submit an election and never pay the premium because you obtained other Health Plan coverage, you will not owe anything. However, nor will you have extended your coverage under your employer’s Health Plan. In effect, your COBRA election will be voided by your failure to pay the premium for that coverage.

Note: Keep in mind that the other Health Plan, particularly if it’s less expensive, will not necessarily be comparable to the Health Plan available to you under COBRA. You should compare the terms of coverage as well as the cost before deciding whether to obtain other Health Plan coverage.

Q14: Continuation of the medical plan I was enrolled in before my furlough is very expensive under COBRA. Can I switch to another plan my employer offers?

Yes, but not until the next open enrollment period, and only if you are covered under the medical plan at that time. As a COBRA participant, you must be given the same opportunity during open enrollment as active pilots to make changes to your medical and/or dental plan coverage. To be eligible to make changes during open enrollment, you will first need to elect and maintain continued coverage under the Health Plan you had before you were furloughed, and then elect to switch to another plan during the open enrollment period.

Q15: My spouse’s employer offers Health Plan coverage. Should we consider enrolling in that plan?

Yes. If your spouse’s employer offers family Health Plan coverage, particularly at a reduced rate, you may want to explore the possibility of electing that coverage as an alternative to COBRA continuation. The law requires group Health Plans to allow enrollment and/or changes in coverage if other coverage is lost provided an election is made within the required period, which period has now also been extended until 30 days after the end of the Outbreak Period. Please follow up with your spouse’s employer as soon as possible if you think you might be interested in doing this.

Example:

• Your health plan coverage ends May 31.
• The standard 30-day special enrollment period wherein your spouse’s employer-sponsored plan must allow you to enroll, is extended by disregarding the Outbreak Period.
• Assume the National Emergency ends June 30, 2020, and thus 60 days later, the Outbreak Period ends on August 29, 2020.
• You have until October 28, 2020, which is 30 days after the end of the Outbreak Period, to enroll in your spouse’s plan.

Q16: Does ALPA offer a medical plan that I could consider as an alternative to COBRA?

No, ALPA does not offer a medical plan. However, individual Marketplace insurance coverage may be available in the area where you reside. 

Q17: What are my options under my healthcare flexible spending account Health Plan after I am furloughed?

Under most healthcare flexible spending account (FSA) Health Plans, your coverage ends, and your ability to make pre-tax contributions ends, on the date you cease to be an active employee. Whenever it ends, you may continue your coverage for the remainder of the calendar year under the FSA Health Plan, pursuant to COBRA, by making after-tax contributions (unless such continuation is specifically prohibited by the plan). Your after-tax contributions will equal 102% of the amount you were contributing on a pre-tax basis (or the amount you and your employer were jointly contributing, if applicable) before your coverage ended.

Q18: What happens if I have pre-tax contributions left in my account in the FSA Health Plan when my coverage ends?

If you have money in your account under the FSA Health Plan when your coverage ends, you may continue to submit claims for reimbursement of eligible medical and dental expenses that you incurred before your coverage ended, up to the entire amount you elected to contribute for the calendar year (less any previous reimbursements). Expenses are considered incurred when the service is rendered, not when you are billed or pay for the service. However, if you wish to submit claims for reimbursement of expenses incurred on or after the date your FSA Health Plan coverage ends, you must elect to continue making after-tax contributions to your FSA Health Plan under COBRA within the extended COBRA election timeframes described above.

Example: You elected to make pre-tax contributions to your FSA Health Plan in the amount of $2,400 for 2020 ($100/paycheck or $200/month). You are furloughed as of May 1, 2020, after having made pre-tax contributions of $800 ($200 x 4 months) to your FSA Health Plan. As of May 1, you had already been reimbursed for $200 of eligible expenses and had $600 left in your account.  You had incurred an eligible dental expense in the amount of $50 in April, but you did not submit for reimbursement of that expense before May 1. Even if you do not elect to continue your coverage under COBRA, you will still be able to submit for reimbursement of the $50 expense, as well as any other eligible expenses you may have incurred prior to May 1. However, unless you elect under COBRA to make after-tax contributions to your FSA Health Plan (in the amount of $204 per month), you will not be able to submit for reimbursement of any otherwise eligible expenses you incur after May 1.

Q19: Why would I elect COBRA continuation of my FSA Health Plan if my contributions after the furlough date must be made on an after-tax basis?

You may wish to elect COBRA continuation and continue making after-tax contributions to your FSA Health Plan if the eligible expenses you (and your family, if applicable) incur prior to the date your FSA Health Plan coverage ends do not equal or exceed your pre-tax contributions to the FSA. In that case, by electing COBRA continuation, you may continue to submit for reimbursement of any otherwise eligible expenses you incur during the continuation period.

Example: You elected to make pre-tax contributions to your FSA Health Plan in the amount of $2,400 for 2020 ($100/paycheck or $200/month). Your coverage under the FSA Health Plan ends as of May 1. You had contributed $800 as of that date ($200 x 4 months) but had not yet incurred any eligible expenses. You were intending to have LASIK surgery in June but, instead, you are furloughed as of May 1, and your FSA Health Plan coverage ends as of that date. By electing continuation of your FSA Health Plan under COBRA and making the required post-tax contribution of $204 for May and June, you would be eligible to submit for reimbursement of otherwise eligible expenses incurred during the month of June, up to the entire $2,400 elected for 2020 (less any previous reimbursements).

Q20: What if I’ve already been reimbursed more than the amount I actually contributed pre-tax to my FSA Health Plan at the time my coverage ends under the plan?

Your employer cannot require you to pay the difference between the amount you have been reimbursed and the amount you have already contributed.  However, in this case, your employer is not required to offer you the option to continue participation in the FSA Health Plan under COBRA.

Example: Your FSA Health Plan election for 2020 is $2,400. You are furloughed May 1, and your FSA Health Plan coverage ends as of that date. Your pre-tax contributions to the FSA Health Plan total $800 ($200 x 4 months), but you have already been reimbursed $1,800 for eligible expenses you incurred during the year before your furlough date. You are not required to make after-tax contributions to the FSA health Plan after your furlough date just because your reimbursements exceed your contributions.