COBRA and Dropping Dependent Coverage

[Guest lynne wakefield]

A group health plan has decided to eliminate dependent coverage as an option. The question is how this affects COBRA participants. Moving forward, there will be no COBRA coverage for dependents. However, two individuals have elected and are currently receiving family coverage under COBRA. Can the group health plan cease to provide COBRA coverage for the dependents covered under this family coverage?

Under the regulations, if coverage is modified for similarly situated nonCOBRA beneficiaries, then the coverage made available to qualified beneficiaries is modified in the same way. This seems to indicate that if no dependent coverage is offered under the group health plan, then the group health plan would not be obligated to continue to provide COBRA coverage to dependents. However, there are also a number of instances in the regulations that speak in terms of all qualified beneficiaries being given the same rights as active employees (e.g., to elect particular benefits or benefit options). If the dependents receiving COBRA coverage are treated as active employees, it seems as though they could not be dropped from COBRA coverage. Also, this does not seem to fall within the list of circumstances for which early termination of COBRA coverage is permitted. It seems that the best approach here is to continue providing COBRA coverage to the dependents in these circumstances, even though dependent coverage has been eliminated under the group health plan. Any thoughts?

[Kirk Maldonado]

lynne wakefield:

Is the employer eliminating dependent coverage, or just eliminating its subsidy of the cost of providing dependent coverage?

[Guest lynne wakefield]

The employer is eliminating dependent coverage.

[Guest lynne wakefield]

Unfortunately, it doesn't seem like anyone has a clear answer on this issue?

[papogi]

My understanding of COBRA regs has always been that they are there to make sure that former employees and dependents are treated as if they were still active participants for a set period of time. If dependent coverage is no longer allowed, and active employees no longer have the luxury of having their deps covered, then the same goes for COBRA participants. If a benefit is being eliminated, there is no way to pay to continue it. These dependents simply drop off the plan, with no continuation rights. An employer is only obligated to continue coverage to qualified individuals if that coverage is even available in the first place.

[jsb]

What about the case of an individually covered current QB who got their QB status as, say, the former spouse of an employee? Does that QB lose their status, and therefore their coverage under the plan?

[Don Levit]

This is a fascinating question, and I will do some research on it. I would agree with Papogi at this point.

In a different scenario, let's say the employer provided a longer COBRA extension than the minimum of 18, 29, or 36 months. Let's assume the employer provided a 10 year extension. Could the employer reduce the extension period to the minimum at any time?

Don Levit

[papogi]

Here's what I THINK regarding the two questions:

An individually covered QB could stay on the plan since they are paying a single rate as any single employee would. As long as their claims are mixed in when arriving at a single COBRA rate (they would be), I would think that person can stay on.

An employer can reduce the continuation period at any time, as long as it is done uniformly, and does not undercut the Federal minimums.