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COBRA for Former Employee


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Health plans and COBRA are not my area of experience. A question has arisen from my employer regarding COBRA continuation of health plan coverage. It seems a basic question, but I have not found any discussion on this point.

Say an employee voluntarily terminated his employment in January 21, 2021. He was covered by our health plan at that time, and his coverage ended that day. Under the current rules, he has until the earlier of (1) one year from January 21, 2021, or (2) 60 days after the announced end of the Covid-19 emergency to elect to continue health coverage under our plan.

If he does not obtain health coverage during the ensuing months, we understand that he remains eligible to elect COBRA under our plan until that deadline.

What if he is covered by a health plan with his new employer and then he terminates that employment before the deadline to elect COBRA coverage under our plan--could he elect COBRA under our plan rather than the new employer's plan? Or, does the intervening coverage under another plan mean that he can no longer elect COBRA coverage under our plan?

Thank you for your guidance/thoughts/comments.

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I would take the position that the former employee is still a QB eligible for COBRA under the Outbreak Period rules.

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. 

In this case, the former employee has not yet elected COBRA under the employer at issue.  So any other group health plan enrollment during the interim will not cut short the QB's COBRA rules under the Outbreak Period rules that will provide up to a year to make the election.

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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