Easy COBRA ?

[David]

I understand that COBRA applies to employers with 20 or more employees. Do COBRA benefits have to be extended to an employee terminating after age 65 (due to serious illness, if it matters)?

[Guest sdussault]

Until March of last year, you could have gotten away with not offering COBRA, but the Geissal case changed all that. Formerly, if an individual was entitled to Medicare prior to the qualifying event, the individual was not eligible for COBRA continuation. That thinking was reversed by the Supreme Court decision in June of 1998 on the Geissal case. IRS announcement 98-22 provides that a plan is not permitted to cease making COBRA coverage available merely because of entitlement to Medicare benefits that began before the election for COBRA coverage. The operative word here is "before". You state that the employee is over age 65, therefore, they are already entitled to Medicare and hence a qualified beneficiary under COBRA. If the employee had left prior to age 65 and was not eligible for Medicare for disability purposes, you could have terminated COBRA eligibility once Medicare entitlement was effective.

Sorry, looks like you'll have to offer COBRA.

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[Guest Barb Raney]

I have an employee who terminated his employment on a certain date. His health insurance terminated on that date. He went to the doctor 5 days later. He does not want COBRA. He called and said he had been advised that the could take the COBRA coverage for 5 days, have the visit, test, rx, etc. covered. He wants to send me a check for 5 days. I have been unable to determine if we can do this, do we have to do this? Can anyone help? Thanks.

[Guest Lorna Pate]

Barb,

An employee may elect to forego COBRA continuation coverage for himself. However, a group health plan is required to offer a qualified beneficiary the opportunity to elect continuation coverage during the election period (60 days)and make available the continuation coverage for the entire election period, even if he has signed a waiver form.

Also, claims incurred by a qualified beneficiary during the election period does not have to be paid until continuation coverage is elected and payment made. It is also important to note, that a health plan can treat a qualified beneficiary's use of the health plan's services as constructive election of COBRA continuation coverage (it must notify qualified beneficiary prior to use of services) and can require payment.

I have not seen continuation coverage in terms of days less than 30. He cannot pay you just for five days, since premiums are calculated on a yearly basis, payable in monthly installments. Therefore, if he is within the 60 day election period, he can still go ahead and elect continuation coverage. If he does not want COBRA after thirty days, he can simply not pay his premium within the applicable timeframe and the health plan can discontinue his coverage due to failure to pay premium.

I advise you to read the Federal Register (Wednesday, February 3, 1999) as it goes into detail about continuation coverage requirements applicable to group health plans.

[Brigid Anderson]

See Treas. Reg. 54.4980B-8, Q/A-3, which says a group health plan must allow that payment for COBRA be made in monthly installments but MAY allow for additional alternative intervals (for example, weekly, quarterly or semiannually). That seems to address your situation--you don't need to offer anything but monthly payments.

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[Guest Lorna Pate]

If a covered employee elects not to have COBRA continuation coverage, but the spouse and dependent child elect COBRA continuation coverage,then what impact will this have on deductible and out-of-pocket calculations?