COBRA/other group health plan coverage

[JWK]

Married employee terminates employment. Elects COBRA for self and covers spouse as dependent. Gets new job 6 months later, with group health plan coverage, no pre-ex exclusion. Does not enroll spouse in coverage at new job. Can Employer 1 terminate spouse's COBRA coverage? My opinion is yes, because she ceased to be a QB once the COBRA election period ran out under Employer 1's plan. However, I've seen advice in some COBRA guides that Employer 1 can't terminate spouse's COBRA coverage because SPOUSE did not become covered under another group health plan. My feeling is spouse has no COBRA rights once the 60-day election period expires and we're really terminating the former employee's coverage, which entails termination of dependent coverage as well. If we allow the spouse to continue, aren't we giving her a COBRA election outside the 60-day window?

Any thoughts or cites appreciated.

[jeanine]

Check the COBRA 2000 regs found on various sites that you can access from this site. (Go under Topics, choose COBRA). I believe the new regs state that each QB has the separate right to elect and reject coverage. In fact, you must offer COBRA to the employee, the spouse, and the dependent children. If the spouse and children do not decline, then they have accepted. So, your employee has a right to COBRA, the spouse also has a right to COBRA. We have a similar instance here where the spouse is continuing COBRA even though the employee has different coverage for himself because the spouse is extremely ill and does not want to leave the former health network.

[JWK]

Thanks for your reply, jeanine, but I guess I wasn't clear in my description of the facts. Spouse WAS offered COBRA, but she did not elect COBRA. Her husband, the former employee, elected COBRA and covered her as a dependent. The paid the premium for individual plus one coverage, not the premiums for two separate individual coverages.

My reading of the regs is that an individual ceases to be a QB if he/she doesn't elect COBRA by the end of the election period. 54.4980B-3, A-1 (f). And, if the plan's obligation to offer coverage to a QB ceases because the QB becomes covered under another group health plan, "the plan is not obligated to make coverage available to the individual who is [covered under the plan but] not a qualified beneficiary." 54.4980B-7, A-1 ©. Therefore, it seems clear that COBRA coverage can be terminated for all the covered individuals, including the spouse, who lost QB status at the end of the election period.

Comments?

[jeanine]

Maybe I don't understand the regs, but why is the spouse not a QB even though she is covered as a dependent under the employee's COBRA? My understanding is that a QB is any individual, on the day before the qualifying event, is covered under the group plan as a covered employee, spouse of employee, or dependent child of employee. New spouse after election or new child of QB not the employee is a covered dependent and not a QB. Are you saying the spouse lost her QB status because the husband covered her as a dependent and not individually? Why is she not covered under the new plan? Is there a pre-ex time that applies to her?

[JWK]

As noted previously, I agree that the spouse was a QB but I think she lost QB status when she didn't elect COBRA by the end of her election period. That's the cite to the -3 reg, which defines "qualified beneficiary".

She's not covered under the new plan because the new employer doesn't offer coverage to dependents, only to employees.

[jeanine]

Sorry, but I just don't agree with your analysis. What's the difference if he or she put her on the COBRA plan? As long as she didn't specifically reject COBRA she automatically accepts COBRA coverage when the employee does. (this is kind of a backward reading that if an employee accepts & the others don't reject, then employee is held to have elected family coverage). The COBRA provider has the option of charging 2 individual rates or the family plan even if the 2 individual rates are more costly. I just don't think it's wise to remove her under your analysis when the enrollees clearly meant to cover both persons as QB's. I would rather be wrong in keeping her covered, especially if she is not running up hundreds of thousands of medical expenses than having to explain this position if and when she sues you.

[JWK]

I understand your position, and I see how you get there in the -6 regs. I think a possible distinguishing factor in this fact pattern is that the husband (i.e., former employee) specifically checked the box for individual plus spouse coverage (thereby saving money on premium). I think by checking that box he indicated that he was not covering her as a QB. I suspect, but don't know, that the former employee would have complained if he had been told he had to pay two individual premiums. Your point about erring on the side of not terminating COBRA is well taken. Thanks for the responses.

[Guest joan s]

A former employee's eligible COBRA coverage time period will expire on February 28, 2001. The current employer will not allow her to enroll her spouse and dependent children until an "open enrollment" period in July, 2001. Is it true that the spouse and dependent children are eligible for 36 months of coverage? 18 months over the former employee's covergae period?

[JWK]

Probably not true that the spouse/dependents get a 36-month COBRA period. The length of the period depends on the type of qualifying event that gave rise to the COBRA rights (and any subsequent event that would be a qualifying event). Unless there's been disability/death/divorce/Medicare entitlement/loss of dependent status, the 18 months is probably the limit.

However, it's likely that all is not lost. If the COBRA period has been exhausted, it is very likely that the "new" plan cannot delay enrollment of the dependents until the open enrollment period. They are likely entitled to a special enrollment period, as required by HIPAA, for "loss of other coverage." Exhaustion of COBRA is a loss of other coverage. I'd tell the former employee to pursue this angle with the new plan.