How long must COBRA continuation
coverage be available to a qualified beneficiary?
Up to 18 months for covered employees, as well as
their spouses and their dependents, when workers otherwise would lose coverage
because of a termination or reduction of hours.
Up to 29 months is available to employees who are determined to have been
disabled at any time during the first 60 days of COBRA coverage and applies as
well to the disabled employee's nondisabled qualified beneficiaries.
Up to 36 months for spouses and dependents facing a loss of employer-provided
coverage due to an employee's death, a divorce or legal separation, or certain
other "qualifying events".
What is a qualifying event?
The qualifying event requirement is satisfied if the event is (1) the death of a
covered employee; (2) the termination (other than by reason of the employee's
gross misconduct), or a reduction of hours, of a covered employee's employment;
(3) the divorce or legal separation of a covered employee from the employee's
spouse; (4) a covered employee becoming entitled to Medicare benefits under
Title XVIII of the Social Security Act; or (5) a dependent child ceasing to be a
dependent child of the covered employee under the generally applicable
requirements of the plan and a loss of coverage occurs.
Who is a Qualified Beneficiary?
Under the statute, a qualified beneficiary is
someone who "is a beneficiary under the plan" (i.e., is covered under the plan)
immediately prior to the qualifying event and who is:
The spouse or dependent child of a covered employee.
A covered employee (but only if the qualifying event is a termination or
reduction in hours of the covered employee's employment.
Are Newborns and Adopted Children
considered "qualified beneficiaries"?
Yes. A child who is "born to or placed for adoption
with the covered employee during the period of continuation coverage under [Code
§490B, the Code's COBRA provisions]" is also a qualified beneficiary regardless
of whether the qualifying event occurred before, on, or after such date if they
are enrolled within 30 days of birth or adoption.
What is the definition of a Covered Employee?
Covered employee "means an individual who is (or was) provided coverage under a
group health plan by virtue of the performance of services by the individual for
1 or more persons maintaining the plan. This definition is expansive and
includes retirees, independent contractors, self-employed persons and partners
of a partnership.
What is the definition of Dependent
Child?
COBRA does not define "dependent child." Who is a dependent child is determined
by the terms of the group health plan.
What Plans Are Subject to COBRA?
Virtually all group health plans maintained by employers for their employees are
subject to COBRA's provisions, include group health plans of corporations,
partnerships, tax exempt organizations, state and local governments. This also
includes Health Care Spending Accounts.
What Plans Are Not Subject to
COBRA?
Small Employer Plans:
Small employer plans are entirely exempt from COBRA. If all employers
maintaining the plan normally employed fewer than 20 employees on a typical
business day during the preceding calendar year, the plan falls within the
"small employer plan exception"
The Federal Government's Group Health Plan:
The Federal government's group health plan is not subject to COBRA. However, a
separate law, the Federal Employees Health Benefits Amendments Act of 1988
requires the Federal government to offer its employees continuation coverage
effective January 1, 1990.
Certain Church Plans
Certain church plans also are not subject to COBRA. The IRS has concluded that a
plan for employees of an institute of higher learning under church auspices was
a church plan, and that plan was accordingly not subject to COBRA.
Can a qualifying event result from a voluntary termination of employment?
Yes. Apart from gross misconduct, the facts surrounding a termination or
reduction of hours are irrelevant. It does not matter whether the employee
voluntarily terminated or was discharged.
What triggers the obligation to offer COBRA coverage?
COBRA requires employers to offer a COBRA election to qualified beneficiaries
when there is: (1) a triggering event; and (2) the triggering event causes (or
will cause) a loss in plan coverage that occurs within the maximum coverage
period for that event. When both elements (1) and (2) exist, there is a COBRA
"qualifying event." A COBRA "qualifying event" is a specified triggering event,
"which, but for the continuation coverage required (by COBRA), would result in
the loss of coverage of a qualified beneficiary." An event is a qualifying event
if it (a) is one of the specified events ("triggering events"), (b) causes the
covered employee, spouse or dependent child to lose coverage and {c} occurs
while the plan is covered by COBRA. If a qualified beneficiary experiences a
triggering event, but there is no loss in coverage attributable to the
triggering event, there is no qualifying event and COBRA coverage does not need
to be offered.
What Specific Events ("Triggering Events") can be Qualifying Events?
The statute specifies six triggering events that, if they result in a loss of
coverage, can be qualifying events:
Death of the covered employee;
Voluntary or involuntary termination of the covered employee's employment other
than by reason of gross misconduct (note that a retirement is considered a
termination of employment);
Reduction in hours of the covered employee's employment;
Divorce or legal separation of the covered employee from the employee's spouse;
Dependent child ceasing to be a dependent child under the generally applicable
requirements of the plan; and
An employer's bankruptcy, but only with respect to health coverage for retirees
and their families.
When must the employee or qualified beneficiary
notify the plan administrator of any triggering events?
The covered employee or qualified beneficiary must notify the plan administrator
within 60 days of the occurrence of these triggering events:
divorce or legal separation of covered employee from his or her spouse; and
dependent child ceasing to be a dependent under the plan.
The proposed regulations expand this rule to provide that the notice period is
60 days after the triggering event or, if later, the date coverage would be
lost. "If the notice is not postmarked and sent to the employer or other plan
administrator [within the 60 day period], the group health plan does not have to
offer the qualified beneficiary the opportunity to elect COBRA continuation
coverage."