The Con­sol­i­dat­ed Omnibus Bud­get Rec­on­cil­i­a­tion Act of 1985 (COBRA) requires employ­ers to offer cov­ered employ­ees who lose their health ben­e­fits due to a qual­i­fy­ing event to con­tin­ue group health ben­e­fits for a lim­it­ed time at the employee’s own cost. The length of the COBRA cov­er­age peri­od depends on the qual­i­fy­ing event and is usu­al­ly 18 or 36 months. How­ev­er, the COBRA cov­er­age peri­od may be extend­ed under the fol­low­ing five circumstances:

  1. Mul­ti­ple Qual­i­fy­ing Events
  2. Dis­abil­i­ty
  3. Extend­ed Notice Rule
  4. Pre-Ter­mi­na­tion or Pre-Reduc­tion Medicare Entitlement
  5. Employ­er Exten­sion; Employ­er Bankruptcy

In this blog, we’ll exam­ine the first cir­cum­stance above. For a detailed dis­cus­sion of all the cir­cum­stances, request UBA’s Com­pli­ance Advi­sor, “Exten­sion of Max­i­mum COBRA Cov­er­age Peri­od”.

When deter­min­ing the cov­er­age peri­od under mul­ti­ple qual­i­fy­ing events, the max­i­mum cov­er­age peri­od for a loss of cov­er­age due to a ter­mi­na­tion of employ­ment and reduc­tion of hours is 18 months. The max­i­mum cov­er­age peri­od may be extend­ed to 36 months if a sec­ond qual­i­fy­ing event or mul­ti­ple qual­i­fy­ing events occur with­in the ini­tial 18 months of COBRA cov­er­age from the first qual­i­fy­ing event. The cov­er­age peri­od runs from the start of the orig­i­nal 18-month cov­er­age period.

The first qual­i­fy­ing event must be ter­mi­na­tion of employ­ment or reduc­tion of hours, but the sec­ond qual­i­fy­ing can­not be ter­mi­na­tion of employ­ment, reduc­tion of hours, or bank­rupt­cy. In order to qual­i­fy for the exten­sion, the sec­ond qual­i­fy­ing event must be the cov­ered employee’s death, divorce, or child ceas­ing to be a depen­dent. In addi­tion, the exten­sion is only avail­able if the sec­ond qual­i­fy­ing event would have caused a loss of cov­er­age for the qual­i­fied ben­e­fi­cia­ry if it occurred first.

The extend­ed 36-month peri­od is only for spous­es and depen­dent chil­dren. In order to qual­i­fy for extend­ed cov­er­age, a qual­i­fied ben­e­fi­cia­ry must have elect­ed COBRA dur­ing the first qual­i­fy­ing event and must have been receiv­ing COBRA cov­er­age at the time of the sec­ond event. The qual­i­fied ben­e­fi­cia­ry must noti­fy the plan admin­is­tra­tor of the sec­ond qual­i­fy­ing event with­in 60 days after the event.

Exam­ple: Jim was ter­mi­nat­ed on June 3, 2017. Then, he got divorced on July 6, 2017. Jim was eli­gi­ble for COBRA con­tin­u­a­tion cov­er­age for 18 months after his ter­mi­na­tion of employ­ment (the first qual­i­fy­ing event). How­ev­er, his divorce (the sec­ond qual­i­fy­ing event) extend­ed his COBRA con­tin­u­a­tion cov­er­age to 36 months because it occurred with­in the ini­tial 18 months of COBRA cov­er­age from his ter­mi­na­tion (the first qual­i­fy­ing event).

The health plan should indi­cate when the cov­er­age peri­od begins. The plan may pro­vide that that the plan admin­is­tra­tor be noti­fied when plan cov­er­age is lost as opposed to when the qual­i­fy­ing event occurs. In that case, the 36-month cov­er­age peri­od would begin on the date cov­er­age was lost.

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