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Consolidated Omnibus Budget Reconciliation Act (COBRA)

Does your group health plan have reasonable procedures for providing notice of the extension of an 18-month period of COBRA coverage due to a second qualifying event or disability determination by the SSA?

Extension of COBRA Coverage

There are two circumstances under which an extension of an 18 month maximum required period of COBRA coverage may become available:

  • When a second qualifying event occurs; or
  • When a qualified beneficiary is determined by the Social Security Administration (SSA) to become disabled.

The qualified beneficiary must notify the plan administrator of a SSA determination of disability or if a second qualifying event occurs in order to extend the period of COBRA coverage.

Second Qualifying Event

An 18-month extension may be available to a qualified beneficiary receiving an 18-month maximum required period of COBRA coverage (giving a total maximum period of 36 months of COBRA coverage) if the qualified beneficiary experiences a second qualifying event. A second qualifying event is:

  • The death of the covered employee;
  • The divorce or legal separation of the covered employee and spouse;
  • The covered employee’s becoming entitled to Medicare (Important: Medicare entitlement of a covered employee is not a second qualifying event for a qualified beneficiary unless the Medicare entitlement would have resulted in a loss of coverage under the group health plan for the qualified beneficiary.) See IRS Revenue Ruling; or
  • A loss of dependent child status under the plan.

The second event can be a second qualifying event only if it would have caused the qualified beneficiary to lose coverage under the plan in the absence of the first qualifying event.

The plan should describe in its SPD, and in the election notice for any offer of COBRA coverage with a maximum duration of less than 36 months, how notice of a second qualifying event should be provided.

Disability

If one of the qualified beneficiaries in a family is disabled and meets certain requirements, all of the qualified beneficiaries in that family are entitled to an 11-month extension of an 18-month COBRA coverage period (for a total maximum period of 29 months of COBRA coverage). The group health plan can charge qualified beneficiaries up to 150 percent of the cost of coverage during the 11-month disability extension.

This 11-month extension may be available if a qualified beneficiary is both determined by the SSA to be disabled at some point before the 60th day of COBRA coverage, and the qualified beneficiary (or another person on his or her behalf) notifies the plan administrator of the SSA determination. The extension must be provided not only to the disabled qualified beneficiary but to any family member who is a qualified beneficiary in connection with the same qualifying event. The plan can set a time limit for providing this notice of disability, but the time limit cannot end before 60 days after the latest of:

  • The date on which the SSA issues the disability determination;
  • The date on which the qualifying event occurs;
  • The date on which the qualified beneficiary loses (or would lose) coverage under the plan as a result of the qualifying event; or
  • The date on which the qualified beneficiary is furnished the COBRA general notice or SPD (in which the qualified beneficiary is informed of the obligation to provide the disability notice).

However, the plan may require this notice of disability to be provided before the end of the first 18 months of COBRA coverage.

The right to a disability extension may be terminated if the SSA determines that the qualified beneficiary is no longer disabled. The plan can require qualified beneficiaries to provide notice when such a determination is made. The plan must give the qualified beneficiary at least 30 days after the latest of the date of the SSA's final determination that the qualified beneficiary is no longer disabled; or the date on which the qualified beneficiary is informed of this notice obligation, through the furnishing of the plan's summary plan description (SPD) or COBRA general notice, to provide such notice.

The plan should describe in its SPD, and in the election notice for any offer of COBRA coverage with a maximum duration of less than 36 months, how notice of a disability determination or a notice of no longer being disabled should be provided.