QUESTION: Although Medicare entitlement is listed as a COBRA triggering event, our company’s COBRA TPA does not offer COBRA to covered employees when they become entitled to Medicare. Is Medicare entitlement a COBRA qualifying event for active employees who become entitled to Medicare but do not lose coverage under our group health plan?
ANSWER: No, Medicare entitlement is not a COBRA qualifying event under these circumstances. If a COBRA triggering event, such as Medicare entitlement, does not cause loss of coverage under your plan, there is no qualifying event, and COBRA need not be offered. You are correct that becoming entitled to Medicare is listed as a triggering event in the COBRA statute. However, Medicare entitlement rarely causes a loss of plan coverage for active employees and, therefore, will rarely be a qualifying event. This is because the Medicare Secondary Payer (MSP) rules generally prohibit group health plans from making Medicare entitlement an event that causes a loss of coverage for active employees.
As a general rule, the MSP statute prohibits a group health plan from “taking into account” the age-based or disability-based Medicare entitlement of an individual who is covered under the plan by virtue of the individual’s current employment status. In addition, the plan must generally provide a current employee who is age 65 or older with the same benefits, under the same conditions, as are provided to employees who are under age 65. Among the employer or insurer actions that constitute an impermissible “taking into account” are (1) terminating coverage because the individual has become entitled to Medicare based on age; or (2) in the case of a large group health plan, denying or terminating coverage because the individual is entitled to Medicare based on disability without also denying or terminating coverage for similarly situated individuals who are not entitled to Medicare based on disability. (Special rules apply for ESRD-based Medicare eligibility and entitlement.) Consequently, Medicare entitlement will rarely be a COBRA qualifying event because it will rarely cause a loss of plan coverage for active employees.
Be aware, however, that it is permissible under the MSP rules for Medicare entitlement to cause a loss of coverage for covered retired employees. In such a case, Medicare entitlement would constitute a qualifying event for the affected spouse and dependent children (not for the covered retiree), permitting them to elect up to 36 months of COBRA under the plan.
For more information, see EBIA’s COBRA manual at Sections VII.G (“Qualifying Events: Entitlement to Medicare (Event #6)”), VII.K (“Triggering Event Must Cause Loss of Coverage”), and XXX.D (“Medicare Secondary Payer (MSP) Rules”); see also EBIA’s Group Health Plan Mandates manual at Section XXIV (“Medicare Secondary Payer (MSP) Rules”) and EBIA’s Self-Insured Health Plans manual at Section XXV.C (“Coordination of Benefits with Medicare, TRICARE, and Medicaid”).
Contributing Editors: EBIA Staff.