HRAs and COBRA

[Guest Nini]

We have a client that maintains a health reimbursement arrangement. The employer contribution is made to the account on the last day of the month. Two employees have terminated employment and have elected COBRA. How does this work with respect to the 18 month period – can the employer extend coverage until the last day of the 18th month?

When an employee terminates on 2/16/08 and elects COBRA – continuation coverage will run through 8/16/09. However, the premium for the final month is due 8/1/09 and the employer contribution will not be made until 8/31/09. Is it permissible for the employer to extend for all employees continuation coverage through the end of the 18th month? Or is it possible to pro-rate the premium for the 18th month?

[leevena]

Your plan document should address this issue. Most plans allow for coverage through the end of the month, but a few don't.

[GMK]

leevena is right. Check the plan document.

COBRA coverage begins on the date that coverage would otherwise have been lost by reason of a qualifying event. Your plan specifies when coverage ends, which may not be the same day as the termination of employment.

My little DOL booklet on COBRA says

"COBRA establishes REQUIRED (my emphasis) periods of coverage for continuation health benefits. A plan, however, may provide longer periods of coverage beyond those required by COBRA. ..."

See also page 12 of http://www.dol.gov/ebsa/pdf/cobraemployee.pdf