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Need help on understanding COB with COBRA.  Situation: I had medical COBRA after being laid off.  After getting laid off, my spouse obtained a FT job with benefits and I am included as a dependent on her medical insurance.  For one month, these two policies overlapped before I terminated COBRA.  For my claims during this "double-coverage" month, is COBRA still primary for me or does it switch to secondary and my spouse's insurance becomes primary for me?  Thanks for help in navigating the COB.  Makes a big difference with meeting deductibles.  

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That's a tricky one.

Under the NAIC model COB rules, COBRA is generally secondary to active coverage.  That's true even where the individual is a dependent on the active coverage.

However, a drafting note in the COBRA section says to refer to the dependent vs. non-dependent rule in your situation.  In other words, it says that if you're covered as a dependent on an active plan while covered by COBRA as a non-dependent, you don't look to the COBRA COB rules.  Instead, you look to the dependent vs. non-dependent rules.

Under the dependent vs. non-dependent rules, the primary plan is the one in which you are covered as a non-dependent.  In that case, it's the COBRA plan.

I would definitely confirm with the plans that they are following this approach.  Not all plans follow the model COB rules, and this is a very nuanced aspect of them.

NAIC Model COB Rules:

https://content.naic.org/sites/default/files/inline-files/MDL-120.pdf

Drafting Note: This rule applies only in the situation when a person has coverage pursuant to COBRA or under a right of continuation pursuant to state or other federal law and has coverage under another plan on the basis of employment. The rule under Paragraph (1) does not apply because the person is covered either: (a) as a non-dependent under both plans (i.e. the person is covered under a right of continuation as a qualified beneficiary who, on the day before a qualifying event, was covered under the group health plan as an employee or as a retired employee and is covered under his or her own plan as an employee, member, subscriber or retiree); or (b) as a dependent under both plans (i.e. the person is covered under a right of continuation as a qualified beneficiary who, on the day before a qualifying event, was covered under the group health plan as a dependent of an employee, member or subscriber or retired employee and is covered under the other plan as a dependent of an employee, member, subscriber or retiree). The rule under Paragraph (1) applies when the person is covered pursuant to COBRA or under a right of continuation pursuant to state or other federal law as a non-dependent and covered under the other plan as a dependent of an employee, member, subscriber or retiree. The rule in this paragraph does not apply because the person is covered as a non-dependent under one of the plans and as a dependent under the other plan.

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Thanks, Brian, for the quick reply.  Both of my policies are with Anthem and it has been a mess.  Anthem originally processed all claims as you stated, with COBRA as primary.  But 7 mths later, they reversed their decision and are now processing them with COBRA as secondary.  Makes a big difference due to a brand new deductible with my spouse's plan.  Will be filing a Grievance and hope for the best.  Appreciate the guidance.

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This is a tricky one because you were likely supposed to notify your COBRA plan when you became enrolled in other employer-sponsored coverage. If a claim is filed and they find out you had other coverage for that month, they could potentially terminate your COBRA retroactively back to the day before your new coverage is effective. You might want to check your if your COBRA plan required such notification before counting on having two coverages for that month.

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I agree with the prior commenter.  Most plans will terminate COBRA immediately on your being covered by your new employer's plan if that new coverage starts after you have made your COBRA election.  It is possible that Anthem realized that your COBRA coverage was no longer valid, and they may refuse to process your claims at all on that coverage.  COB with COBRA and another plan only makes sense when your other coverage was already in place before you made your COBRA election.  In that case, I would agree that the participant/dependent rule applies.

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Good points @MRestum and @Roberta Casper Watson.

For some more detail--

The rules state COBRA can terminate early if the qualified beneficiary first becomes covered under another group health plan after electing COBRA.  The enrollment in the other group health plan must occur after the qualified beneficiary elected COBRA to cause early termination.

The timing piece means that a qualified beneficiary who enrolled in another group health plan prior to electing COBRA will not be subject to early termination of COBRA because of that other group health plan enrollment. 

Here's a longer summary: https://www.theabdteam.com/blog/early-termination-of-cobra-upon-enrollment-in-other-group-health-plan-or-medicare/

Here's the relevant cite: 

Treas. Reg. §54.4980B-7, Q/A-2:

Q-2.  When may a plan terminate a qualified beneficiary’s COBRA continuation coverage due to coverage under another group health plan?

A-2. (a) If a qualified beneficiary first becomes covered under another group health plan (including for this purpose any group health plan of a governmental employer or employee organization) after the date on which COBRA continuation coverage is elected for the qualified beneficiary and the other coverage satisfies the requirements of paragraphs (b), (c), and (d) of this Q&A-2, then the plan may terminate the qualified beneficiary’s COBRA continuation coverage upon the date on which the qualified beneficiary first becomes covered under the other group health plan (even if the other coverage is less valuable to the qualified beneficiary). By contrast, if a qualified beneficiary first becomes covered under another group health plan on or before the date on which COBRA continuation coverage is elected, then the other coverage cannot be a basis for terminating the qualified beneficiary’s COBRA continuation coverage.

(b) The requirement of this paragraph (b) is satisfied if the qualified beneficiary is actually covered, rather than merely eligible to be covered, under the other group health plan.

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  • 5 months later...

Brian and all - I really appreciate your insights and am hoping you can shed light on my situation.  Summary:

  • I worked at Company A for ten years and obtained health insurance as a benefit.  My wife was covered as a beneficiary.  (If it matters, Group Health Plan A was/is fully-insured.)
  • Recently I moved to Company B and immediately obtained health insurance as a benefit.  My wife became covered as a beneficiary.  (If it matters, Group Health Plan B is self-funded.)
  • Subsequently my wife elected COBRA continuation coverage under Group Health Plan A.  (Reason, if it matters: She needed immediate inpatient care, had already received prior authorization from the first insurer, and did not want to delay treatment while the hospital sought prior authorization from the second insurer.  And I switched jobs so that I would have greater flexibility to care for her upon her discharge and during her long recovery.)
  • Now both insurers are claiming to be secondary!  What is my best course of action?  Are the insurance companies and providers likely to work this out amongst themselves?  (If it matters, the hospital and providers are fully in-network relative to both insurance plans.)
  • My understanding after reading the above-referenced NAIC Model COB Rules / Drafting Note is that COBRA would probably be secondary in our situation.  Specifically, I think my wife is "covered under a right of continuation as a qualified beneficiary who, on the day before a qualifying event, was covered under the group health plan as a dependent of an employee".  Am I missing anything?

Thank you and kind regards,

Alan

 

Reference:  https://content.naic.org/sites/default/files/inline-files/MDL-120.pdf

 

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Another wrinkle: Sometimes people describe a source of potential coverage as health insurance when it is not.

I have a credit-card-sized piece of plastic that bears a Blue Cross logo.  Almost anyone who isn’t an employee-benefits practitioner calls it an insurance card.  But if I read the reverse side’s fine print, that text warns: “Your health benefits are funded entirely by your employer. QCC Insurance Company provides administrative and claims payment services only.”

Whatever State law or rule governs an insurer’s health insurance contract might not govern an ERISA-governed employee-benefit plan, at least not if the plan uses no health insurance contract (and no precedential court decision interprets ERISA to apply an insurance-law or model coordination-of-benefits rule in meaningfully similar circumstances).

Courts’ decisions vary on questions about how to construe or interpret a governing document’s text, and about whether to infer, import, or invent a coordination-of-benefits provision.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Peter - thank you for the insight. Much appreciated.

I have an update. The two insurers communicated with one another and mutually agreed that the COBRA coverage is primary. The reason they gave is that they consider my wife to be the subscriber (since she is the only family member on COBRA).

 

 

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