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Benefits

Must a Plan Provide Extended COBRA Coverage Because of a Spouse’s Disability?

EBIA  

EBIA  

QUESTION: A recently terminated employee has elected COBRA for himself, his spouse, and his children. He notified us within a month after his termination that his spouse is disabled, received a Social Security Administration (SSA) disability determination several years ago, and is receiving Medicare. We know we must offer COBRA coverage to the entire family, but must the plan provide a disability extension (from 18 months to 29 months) due to the spouse’s disability?

ANSWER: You are correct that COBRA coverage must be offered to the employee’s entire family, including the spouse. Other health coverage (including Medicare entitlement) that was in effect before a COBRA election does not disqualify a qualified beneficiary from electing COBRA. And because of the spouse’s disability, COBRA coverage must be provided to everyone in the family for an extended period of up to 29 months.

COBRA requires the maximum coverage period to be extended due to a qualified beneficiary’s disability if the following conditions are met:

  • the qualifying event was the covered employee’s termination of employment or reduction of hours;
  • a qualified beneficiary (who may be the covered employee, spouse, or dependent child) has been issued an SSA determination establishing that he or she was disabled at any time during the first 60 days of COBRA coverage;
  • a qualified beneficiary notifies the plan of this SSA determination within the 18-month period that begins on the date of the qualifying event; and
  • a qualified beneficiary notifies the plan of the SSA determination within 60 days after the latest of—

    1. the date of the SSA disability determination;
    2. the date of the qualifying event;
    3. the date on which the qualified beneficiary loses (or would lose) coverage under the plan due to the qualifying event; or
    4. the date on which the qualified beneficiary is informed, through the furnishing of the plan’s SPD or COBRA initial notice, of both the responsibility to provide the notice of disability determination and the plan’s procedures for providing the notice to the plan administrator.

The extension applies to all qualified beneficiaries with respect to a qualifying event—not just to the disabled qualified beneficiary.

In the circumstances you describe, it appears the requirements for a disability extension have been fulfilled. First, the qualifying event was termination of employment. Second, the spouse was disabled during the first 60 days of COBRA coverage and has an SSA disability determination. (It does not matter that the spouse’s SSA determination was issued years before the qualifying event or that the spouse first became disabled prior to the start of COBRA coverage.) Third, the covered employee notified you of the SSA disability determination within a month after his termination, which is well within the 18-month notice period described above. And fourth, the employee’s notice of disability was given within the required 60-day notice period.

It is important that the plan’s SPD and COBRA notices describe these complicated disability extension rules. If your plan’s initial notice or SPD does not clearly communicate reasonable procedures and deadlines for notifying the plan of a disability, the plan may be required to provide a disability extension of COBRA coverage even if a qualified beneficiary’s notice is very late, and even if the notice is oral, informal, or given to an individual in the company who does not ordinarily handle COBRA matters for the plan. Other issues further complicate the disability extension, such as whether an increased COBRA premium may be charged (150% rather than 102% of the cost to the plan) and whether coverage may be terminated due to a cessation of the disabled qualified beneficiary’s disability. You may wish to consult with your plan’s advisors to ensure compliance. For more information, see EBIA’s COBRA manual at Sections VIII.B.2 (“Second Extending Rule: Disability Extension”), IX.G (“Effect of Coverage Under Other Plan or Entitlement to Medicare”), and XVII.D (“Reasonable Notice Procedures”). You may also be interested in our upcoming webinar “Learning the Ropes: An Introduction to COBRA Continuation Coverage” (live on 11/18/21), or our webinar “Medicare and COBRA: Understanding the Interaction and Avoiding Common Mistakes” (recorded 10/21/2021).

Contributing Editors: EBIA Staff.

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