QUESTION: One of our employees died a few months ago, and his spouse elected COBRA for herself and her 25-year-old daughter, Madeline. Madeline notified us recently that she has reached age 26. Do we need to offer her a new COBRA election or extend her current 36-month maximum COBRA coverage period?
ANSWER: COBRA does not require a new COBRA election or an extension of the maximum COBRA coverage period under these circumstances. But it is advisable to respond to Madeline’s notice within 14 days, notifying her that there will be no changes in her COBRA coverage (i.e., no new COBRA election and no extension of her maximum COBRA coverage period) due to her 26th birthday.
While Madeline apparently did not tell you what she expects to happen to her COBRA coverage now that she is 26, she might think that she will have a new qualifying event that starts a new 36-month maximum COBRA coverage period. Turning 26 would ordinarily be a qualifying event for Madeline if it would cause her to lose coverage under the terms of the plan. Under COBRA, however, she cannot lose her COBRA coverage before the end of her maximum coverage period except in certain limited circumstances (such as failing to pay COBRA premiums). Because she cannot have a loss of coverage due to attaining age 26, she will not have a new qualifying event, and there is no need to offer her a new COBRA election.
Alternatively, Madeline might believe that turning 26 will extend her maximum COBRA coverage period. COBRA’s multiple qualifying event rule lengthens the maximum COBRA coverage period for some qualified beneficiaries when a second qualifying event occurs while they are receiving COBRA coverage. But the multiple qualifying event rule applies only when a qualified beneficiary is receiving COBRA coverage because of a first qualifying event that was a covered employee’s employment termination or reduction of hours (these events usually entail an 18-month maximum coverage period). Madeline’s first qualifying event was the death of a covered employee (her father), so the multiple qualifying event rule does not apply and does not extend her current 36-month maximum COBRA coverage period.
Although her COBRA coverage will not change, it would be best to respond to Madeline’s notice to avoid a misunderstanding that could develop into a dispute. COBRA requires a plan administrator to provide a notice of unavailability if an individual provides a notice of qualifying event, notice of second qualifying event, or notice of disability, and the plan administrator determines that COBRA coverage (or an extension of COBRA coverage) is unavailable. Even though Madeline’s attainment of age 26 was not a qualifying event or second qualifying event, she may have thought it was when she sent her notice. For that reason, we think the best approach is to treat her notice as triggering a notice of unavailability, which should generally be provided within 14 days after the plan received Madeline’s notice. She might be confused if she gets a notice entitled “Notice of Unavailability” telling her that her COBRA coverage and her maximum COBRA coverage period will continue unchanged. We suggest that you carefully tailor the notice (and consider modifying the title) to make it informative rather than confusing.
For more information, see EBIA’s COBRA manual at Sections VII.K (“Triggering Event Must Cause Loss of Coverage”), VIII.B (“Five Ways Maximum Coverage Period Can Be Expanded”), VIII.C (“Six Ways COBRA May Terminate Before Maximum Coverage Period Ends”), and XVIII.M (“Notice of Unavailability of COBRA Coverage”). See also EBIA’s Self-Insured Health Plans manual at Section XXVII.B (“COBRA Considerations for Self-Insured Health Plans”).
Contributing Editors: EBIA Staff.