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Continuation coverage with Gusto

If your health benefits are managed by Gusto, here's what we'll do to help with federal COBRA and state continuation:

  • 1. We’ll determine whether your company is subject to federal COBRA or state continuation laws.
  • 2. Your team will receive continuation notices when they’ve been dismissed from your company to make them aware of their rights and what to do if they’d like to enroll. 
  • 3. The SPD will be available to employees in the Documents section of their Gusto accounts. 
  • 4. Notices from our administrator or carrier partners are sent directly to the employee, typically via snail mail.

For federal COBRA: 

  • We’ll provide an administrator, BASIC Pacific, for companies subject to COBRA to ensure that employees are handled correctly at no additional cost. If your company chooses not to use BASIC Pacific, you’ll be responsible for finding a third party administrator to handle all aspects of COBRA.
  • BASIC will send continuation notices via snail mail to employees so they can enroll if they’d like to continue coverage.
  • Dismissed employees have 60 days from the date they lost coverage or the date COBRA election notices were received to enroll (whichever happens last).
  • Note: Employees who opt into Federal COBRA will continue to be on your company's carrier invoice. BASIC Pacific will collect the funds from COBRA participants each month and forward them to the company (by check or ACH) so that your company can pay the total invoice directly to the carrier.  

For state continuation: 

  • Notices of continuation will be available in the Documents section of your team’s Gusto accounts.
  • We’ll determine what lines of coverage your team is entitled to continue (dental and vision may not be available in every state). 
  • We’ll determine how long this coverage can last, based on state law.
  • If employees choose state continuation coverage, we’ll work with the carriers to get the employee enrolled, unless the carrier is responsible for handling state continuation. The deadline to enroll varies by state, but is usually 30 - 60 days after loss of coverage.
  • Once coverage has been reactivated, we’ll instruct the employee to send a check with the premium amounts to your company (or carrier, if applicable). 
    • Note: The employee will stay on your company's invoice and you’ll be responsible for collecting these premiums from the employee each month moving forward. If they fail to pay, let us know ASAP so we can terminate the policy with the carrier. If the carrier is responsible for state continuation, you’ll need to work with them directly. 
  • To cancel coverage, employees will need to let us know so we can cancel with the carrier. If the carrier is administering state continuation, they will need to contact the carrier.
  • Company admins can find a list of any state continuation enrollees on the Continuation Enrollment Summary in the Benefits section of your Gusto account (excluding CA and FL). Once the enrollment is confirmed, you’ll also receive a detailed email with enrollee-specific information.

Cost of continuation coverage

Costs will vary by plan. The employee is responsible for paying 100% of the premium plus additional administration fees. If they choose to enroll, the payment between the employer and former employee is to be managed outside of Gusto. 

Plan options

Employees are only eligible to enroll in lines of coverage they were actively enrolled in at the time of termination (i.e. if they previously waived dental coverage, they can’t enroll in dental COBRA coverage). However, if they were previously enrolled in more than one line of coverage (i.e. medical and dental) they can choose which lines to continue from the options available (i.e. continue medical and drop dental).

 

 

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