How long must COBRA continuation coverage be provided?
COBRA continuation coverage must be provided from the date of the qualifying event until the earliest date when any one of the following events occurs:
1. the passage of the maximum required period of coverage;
2. the date on which the employer ceases to provide any group health plan to any employee;
3. the date on which coverage ceases under the plan by reason of a failure to make timely payment of the applicable premium .
4. the date on which the qualified beneficiary first becomes, after the date of the election, covered (as an employee, or otherwise) under any other plan providing health care (see below) that does not contain any exclusion or limitation with respect to any pre-existing condition of such beneficiary—other than such an exclusion or limitation which does not apply to, or is satisfied by, such beneficiary by reason of the portability, access, and renewability requirements for group health plans found in the IRC as well as in similar sections of ERISA and the Public Health Service Act .
5. the date on which the qualified beneficiary (other than a retired covered employee or a spouse, surviving spouse, or dependent child of the covered employee) first becomes, after the date of the election, entitled to Medicare benefits (see below); or
6. in the case of a qualified beneficiary who is disabled at any time during the first 60 days of continuation coverage, the month that begins more than 30 days after the date when the Social Security Administration has made a final determination (under title II or XVI of the Social Security Act) that he is no longer disabled.[1]
Becomes Covered. Applying a strict reading of IRC Section 4980B(f)(2)(B), the Supreme Court found that an employee whose employment has been terminated is eligible to elect COBRA continuation coverage under his former employer’s group health plan despite the fact that he also had coverage under another plan offered by his spouse’s employer at the time his employment was terminated. In effect, the Court concluded that an employee with coverage under another plan at the time of termination of employment does not fall within the requirement that, “the qualified beneficiary first becomes, after the date of the election,” covered under any another medical care plan.[2]
A plan of the federal government is not considered another plan providing health care for this purpose, because the federal government is not an employer under IRC Section 5000(d). Thus, eligibility for a federal government group health plan will not terminate COBRA continuation coverage.[3]
Medicare. Being entitled to Medicare benefits is defined not as mere eligibility for benefits, but as actual enrollment in either Part A or Part B of Medicare.[4] But entitlement to Medicare benefits will not terminate the obligation to provide continuation coverage to qualified beneficiaries entitled to continuation coverage by virtue of a proceeding in a case under the bankruptcy provisions of the U.S. Code.
Maximum Required Period of Coverage
The general maximum required period of coverage is 36 months from the date of the qualifying event.[5] But there are significant exceptions.
Termination or Reduction of Hours. When the qualifying event is the termination—other than by reason of the covered employee’s gross misconduct —or the reduction in hours of the covered employee’s employment, the maximum required period of coverage is generally 18 months from the date of the termination or reduction. But if another qualifying event (other than a proceeding in a case under the bankruptcy provisions of the U.S. Code) occurs during the 18-month period following the termination or reduction of hours, the maximum required period is extended to 36 months from the date of the termination or reduction.[6]
Disability. In the case of a qualified beneficiary who is determined, under title II or title XVI of the Social Security Act, to have been disabled any time during the first 60 days of continuation coverage, any reference to 18 months dealing with termination of employment, a reduction in hours, or with multiple qualifying events is deemed to be a reference to 29 months with respect to all qualified beneficiaries. This extension applies only if the qualified beneficiary has provided the plan administrator with appropriate notice of the determination of disability within 60 days of the determination, and provides the plan administrator with notice within 30 days of the date of any final determination that the qualified beneficiary is no longer disabled.[7]
Regulations clarify that this extension of coverage to 29 months due to disability is available if three conditions are satisfied: (1) a termination or reduction of hours of a covered employee’s employment occurs; (2) an individual (whether or not the covered employee) who is a qualified beneficiary in connection with the qualifying event described in (1) is determined to have been disabled at any time during the first 60 days of COBRA coverage; and (3) any of the qualified beneficiaries affected by the qualifying event described in (1) provides notice to the plan administrator of the disability determination on a date that is both within 60 days after the date when the determination is issued and before the end of the original 18-month period. This extension due to disability applies independently to each qualified beneficiary, whether or not he is disabled.[8]
Medicare Entitlement. In the case of a termination—other than by gross misconduct —or a reduction in hours that occurs fewer than 18 months after the date when the covered employee became entitled to Medicare benefits, the period of coverage for qualified beneficiaries other than the covered employee shall not terminate before the close of the 36-month period beginning on the date when the covered employee became so entitled.[9]
Employer’s Bankruptcy. The bankruptcy of an employer is the only qualifying event that can result in a maximum required period of coverage of more than 36 months.[10] Where the qualifying event is a proceeding in a case under the bankruptcy provisions of the U.S. Code and the covered employee is alive when the bankruptcy proceedings commence, the maximum required period extends until the death of the covered employee, or, in the case of the surviving spouse or dependent children of the covered employee, until 36 months after the death of the covered employee. When the covered employee dies before the bankruptcy proceedings commence and his surviving spouse is, as a surviving spouse, a beneficiary under the plan on the day before bankruptcy proceedings commence, the maximum required period extends until the surviving spouse’s date of death.[11]
Conversion Option. A qualified beneficiary must be given the option to convert the insurance coverage during the 180 day period ending on the expiration of the COBRA continuation coverage period if such a conversion option is otherwise generally available to similarly situated non-COBRA beneficiaries.[12] ASRS .
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[1]
IRC Sec. 4980B(f)(2)(B).
[2]
Geissal v. Moore Medical Corp., 524 U.S. 74 (1998); 118 S. Ct. 1869 (1998); Treas. Reg. §54.4980B-7, A-2. See also Ann. 98-22, 1998-12 IRB 33.
[3]
Notice 90-58, 1990-2 CB 345. See also McGee v. Funderburg, 17 F.3d 1122 (8th Cir. 1994).
[4]
Treas. Reg. §54.4980B-7, A-3.
[5]
IRC Sec. 4980B(f)(2)(B)(i)(IV).
[6]
IRC Sec. 4980B(f)(2)(B)(i).
[7]
IRC Sec. 4980B(f)(2)(B)(i).
[8]
Treas. Reg. §54.4980B-7, A-5.
[9]
IRC Sec. 4980B(f)(2)(B)(i)(V).
[10]
Treas. Reg. §54.4980B-7, A-6.
[11]
IRC Sec. 4980B(f)(2)(B)(i)(III).
[12]
IRC Sec. 4980B(f)(2)(E); Treas. Reg. §54.4980B-7, A-8.
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