Issue 25

COBRA Administration—Disability Extensions and Second Qualifying Events

You may wonder if COBRA coverage can be extended beyond the 18-month COBRA time frame. It can, but only if either of these two conditions is met:

• One of the qualified beneficiaries is disabled.
• A second qualifying event takes place.

Disability Extensions

If any of the qualified beneficiaries in a family is disabled and meets the specified requirements, all qualified beneficiaries in that family are entitled to an 11-month extension of their continuation coverage (for a total maximum period of 29 months of continuation coverage).

The requirements are:

1. The Social Security Administration (SSA) determines that the qualified beneficiary is disabled before the 60th day of continuation coverage.
2. The disability continues during the rest of the initial 18-month period of continuation coverage.

In addition, the disabled qualified beneficiary (or someone on that person’s behalf) must also notify the COBRA plan administrator of the SSA determination.

What type of notice is sufficient?

A copy of the Social Security disability award letter must be provided to the COBRA plan administrator.

The plan can set a time limit for providing this notice, but it cannot be shorter than 60 days, starting from the latest of one of these dates:

• The date SSA issues the disability determination
• The date the qualifying event occurs
• The date the qualified beneficiary loses (or would lose) coverage under the plan as a result of the qualifying event.
• The date the qualified beneficiary is informed of the responsibility to notify the plan administrator and the process for doing so (the qualified beneficiary may be informed of this responsibility via the plan’s SPD or the COBRA general notice).

If the qualified beneficiary meets all requirements, then the 11-month extension will be approved. The plan can charge the qualified beneficiary an increased premium, up to 150 percent of the cost of coverage, during the 11-month disability extension. In such cases, the COBRA administrator would retain the standard 2 percent COBRA fee, and the additional 48 percent would be remitted back to the employer.

NOTE: You would have indicated whether your group intends to charge the 50 percent admin premium charge on your setup document under the company information section:

The right to the 11-month disability extension can be terminated if the Social Security Administration determines that the qualified beneficiary is no longer disabled.

Second Qualifying Events (Special Rule for Dependents)

If a qualified beneficiary receiving an 18-month maximum period of continuation coverage experiences a second qualifying event, the employee’s spouse and dependent children may be entitled to an additional 18-month extension of their coverage continuation (for a total of 36 months of continuation coverage, counted from the original first day of COBRA). A second qualifying event may be one of the following:

• Death of the covered employee.
• Divorce or legal separation of the covered employee and spouse.
• Medicare entitlement for the employee.
• Loss of dependent child status under the plan.

The following conditions must be met for a second event to extend a period of coverage:

• The initial qualifying event is the covered employee's termination or reduction of hours of employment, which calls for an 18-month period of continuation coverage.
• The second event that allows for a 36-month maximum coverage period occurs during the initial 18-month period of continuation coverage (or within the 29-month period of coverage if a disability extension applies).
• The second event would have caused a qualified beneficiary to lose coverage under the plan in the absence of the initial qualifying event.
• The individual was a qualified beneficiary in connection with the first qualifying event and is still a qualified beneficiary at the time of the second event.
• The individual meets any applicable COBRA notice requirement in connection with a second event, such as notifying the plan administrator of a divorce or a child ceasing to be a dependent under the plan within 60 days after the event.

If all conditions associated with a second qualifying event are met, the period of continuation coverage for the affected qualified beneficiary (or beneficiaries) is extended from 18 months (or 29 months) to 36 months.

Of course, both extensions are still subject to early termination of coverage continuation. The plan may terminate continuation coverage earlier than the end of the maximum period for any of the following reasons:

• Premiums are not paid in full on a timely basis.
• The employer ceases to maintain any group health plan.
• A qualified beneficiary begins coverage under another group health plan after electing continuation coverage.
• A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage.
• A qualified beneficiary engages in fraud or other conduct that would justify terminating coverage of a similarly situated participant or beneficiary not receiving continuation coverage.

If continuation coverage is terminated early, the plan administrator must provide the qualified beneficiary with an early termination notice.

If you have any questions, our team of dedicated COBRA analysts will be more than happy to assist you. Feel free to contact your dedicated COBRA account analyst at any time or the COBRA department in general at COBRA@upmc.edu.

Disclaimer: The above information is for informational purposes only and is not legal or tax advice. UPMC Health Plan and UPMC Benefit Management Services do not provide legal or tax advice. For legal or tax advice, please contact your attorney or tax adviser.

Sources:

https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/cobra_fact_sheet#Notices_Required_of_Qualified_Beneficiaries