Jump to content

Cobra In Retirement?


Guest Baron

Recommended Posts

Guest Baron

Amending my question of last evening: Does COBRA apply only when separated from employment other than by retirement with benefits? If one retires with monthly annuity for which the company paid ALL, AND the company provides Medicare supplemental health insurance with minimal retiree cost, is the spouse entitled to COBRA under the supplemental company provided coverage?

Link to comment
Share on other sites

  • 2 weeks later...
Guest Kathleen Meagher

The spouse is entitled to continue the coverage he or she had before the employee retired, so the spouse would not appear to have the right to receive the Medicare supplement, but only the coverage available to active employees. Also, I read the new regs. to provide that the spouse would be entitled to 36 months of COBRA on account of the retiree's Medicare enrollment, even if Medicare started before the retirement date.

By the way, if the retiree was enrolled in Medicare before the actual date of retirement, the company has to offer the retiree COBRA continuation of the active employee plan as an alternative to the Medicare supplement.

Link to comment
Share on other sites

Not only the spouse, but quite possibly the retiree too. They are both qualified beneficiaries under COBRA having both lost coverage under the plan for actives by reason of the retiree's termination of employment (retirement is a termination of employment same as anything else). See new (2/99) Treas. Reg. § 54.4980B-3, Q/A 1(a)(i) and -4, Q/A-1, example 2

As noted in the other post, if the retiree became entitled to Medicare after the date of the COBRA election, then COBRA may be terminated for the retiree. However, if the retiree was entitled to Medicare before the election date, then it has no impact. In that case, offering alternative coverage (the Medicare supplement which is different from coverage under the active plan) to the retiree does not change the obligation to offer the retiree COBRA. Treas. Reg. § 54.4980B-5, Q/A 1(a). If to become covered under the Medicare supplement plan, the retiree must waive COBRA coverage under the active plan, then when the alternative coverage ends, the retiree need not be offered COBRA again (even if, e.g., the alternative coverage ends before the end of what would have been the retiree's COBRA period.) Treas. Reg. § 54.4980B-6, Q/A 7.

In our view, Medicare entitlement will rarely be a qualifying event because it will not cause a loss of coverage under most plans due to the Medicare secondary payer rules. I assume your plan is one of these. So the Medicare entitlement shouldn’t create any additional qualifying event.

However, (keep your eye on the ball here now) if the retiree's spouse becomes covered under the alternative coverage and a subsequent divorce from or death of the retiree would cause the spouse to lose that coverage under the terms of the alternative plan, then the spouse will have experienced a new qualifying event that gives her the COBRA right to elect an additional 36 months of the alternative coverage! Treas. Reg. § 54.4980B-6, Q/A 7 and -3, Q&A-1(h), examples 4 and 5.

------------------

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...