Continuation coverage is available under the VEBA Health Savings Plan in one of two forms: (1) continuation under federal law (a/k/a COBRA), or (2) continuation coverage in lieu of COBRA.
COBRA continuation
Continuation coverage under the VEBA Health Savings Plan is generally available on the same terms and conditions as described in this letter, but there are several differences. Each qualified beneficiary (i.e., the participant and the participant's spouse and eligible dependents) is entitled to COBRA continuation coverage for a period of 18 months.
The level of coverage will be the participant's account balance at the time of the qualifying event (adjusted for investment earnings and losses), plus employer contributions (provided the employer makes contributions on behalf of similarly situated participants who have not experienced a qualifying event), minus reimbursements paid from the account. Contributions shall be made at the same times as they are made for similarly situated participants who have not experienced a qualifying event. The balance of the participant's account is available to all qualified beneficiaries electing continuation coverage on an aggregate basis.
If contributions will be made during the COBRA continuation coverage, the qualified beneficiaries must pay a premium for the coverage. That premium is indicated in the COBRA Continuation Coverage Election Form.
If you wish to continue coverage for your VEBA Health Savings Plan under COBRA, as described above, check the "Accept" box on the COBRA Continuation Coverage Election Form.
Coverage in lieu
As an alternative to COBRA continuation coverage, qualified beneficiaries may choose to continue to access the participant's account via "coverage in lieu of COBRA". No additional contributions are made to the participant's account during the coverage in lieu and no premium is charged for the coverage (note, however, that the Plan may require you to pay administrative fees during your access). The balance of the participant's account is available to all qualified beneficiaries selecting coverage in lieu of COBRA on an aggregate basis. Furthermore, if some qualified beneficiaries elect COBRA and others select coverage in lieu, all qualified beneficiaries will have access to the participant's account on an aggregate basis.
For the participant, coverage in lieu of COBRA shall be provided until the earlier of:
- The date account balance reaches zero
- The date of the participant's death
For a spouse of the participant, such coverage shall be provided until the earlier of:
- The date account balance reaches zero
- The date of the participant's death
- The date of the entry of a valid divorce decree
For a dependent of the participant, such coverage shall be provided until the earlier of:
- The date account balance reaches zero
- The date of the participant's death
- The date the dependent ceases to be a dependent under the terms of the Plan
If you wish to select Coverage in lieu of COBRA, check the "Waive" box on the COBRA Continuation Coverage Election Form and write "Coverage in Lieu" on the form.
