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How Should an Applicable Large Employer Report Coverage of Family Members Who Elect COBRA Separately From the Employee?



QUESTION: Our company is an applicable large employer (ALE), and we sponsor a self-insured health plan. As an ALE, how should we report coverage of family members who elect COBRA separately from the employee?

ANSWER: An employer that sponsors a self-insured group health plan is obligated under Code § 6055 to report coverage information for all enrollees in the health plan, including non-employees (such as COBRA beneficiaries). COBRA qualified beneficiaries may include the spouse (or former spouse) and dependents of a current or former employee. Each qualified beneficiary generally will be entitled to make an independent election to enroll in COBRA coverage. For example, a divorce would be a qualifying event, and the former spouse would have a right to elect COBRA. In this instance, the plan sponsor would have to report coverage information if the former spouse enrolled in COBRA.

The Code § 6055 reporting obligation applies to all coverage providers and is not dependent on your status as an ALE. Enrollment information generally is reported on Form 1095-B. However, as an ALE, you also have an obligation to report offers of coverage under Code § 6056 for any employee who was a full-time employee for any month during a tax year. Code § 6056 reporting is done on Form 1095-C. For non-employees, ALEs with self-insured health plans may report enrollment information either on Form 1095-B or Form 1095-C.

To illustrate, assume that an employee and her spouse are both enrolled in your company’s plan from January through May. In May, the couple divorces and the employee’s spouse loses eligibility for coverage under the plan. But the former spouse is offered and elects COBRA coverage for June through December. In Part III of Form 1095-C addressed to the employee, you should report that the employee was enrolled in coverage from January through December. The employee’s Form 1095-C should also indicate that the spouse had coverage through the employee for January through May. For the period June through December, the former spouse should receive a separate form reporting COBRA enrollment under your company’s plan. You may report the former spouse’s COBRA enrollment on Form 1095-B or Form 1095-C.

For more information, see EBIA’s Health Care Reform manual at Section XXXVI.D(“Information Reporting of Employer-Sponsored Coverage (Applicable Large Employers)”). See also EBIA’s COBRA manual at Section XXVI.P (“Reporting Under Code §§ 6055 and 6056”) and EBIA’s Form 1094/1095 Workbook for Employers and Advisors at Section VIII.D (“Reporting COBRA and Post-Employment Offers and Coverage”).

Contributing Editors: EBIA Staff.

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