COBRA coverage extension for certain eligible retirees beyond the norm

[Guest gaham]

I have a client that would like to extend COBRA coverage for certain eligible retirees beyond the normal COBRA maximum period. In general, they would like to cut off this extension when the retiree becomes entitled to Medicare. If the spouse and/or dependents elect COBRA at the time of the employee's retirement, I believe I am correct in saying that the spouse/dependent would have a second qualifying event when the retiree becomes entitled to Medicare giving them the right to 36 months coverage from the date of the first qualifying event. But what if the employee is age 63 when he retires, i.e., the Medicare entitlement date is more than 18 months after the employee's retirement date. Do the spouse/dependents have this same right? It looks like the final regs. say they do. See 54.4980B-7, A-7© and the preamble. However, this doesn't seem consistent with the statutes. Anybody have any thoughts?

[Christine Roberts]

As you no doubt know the employer extension of coverage is alternative coverage, and if a new qualifying event during the period of alternate coverage causes a spouse or dependent to lose the right to the alternate coverage, it is treated as a brand new qualifying event, whenever it occurs. There is a good discussion of the topic in the Thompson Guide to Mandated Health Benefits (COBRA) by Paul Hamburger, which states that, to understand the regulations on this issue, which are incomplete, one must incorporate relevant sections of the preamble, into the regs. Let me know if you need a copy of the relevant sections, - but don't tell Paul or Thompson Publishing. I am also working on a simlar arrangement for a client so would be interested in exchanging further information.

[Dave Baker]

I pulled this from an earlier thread ( http://benefitslink.com/boards/index.php?showtopic=1141 ):

"However, (keep your eye on the ball here now) if the retiree's spouse becomes covered under the alternative coverage and a subsequent divorce from or death of the retiree would cause the spouse to lose that coverage under the terms of the alternative plan, then the spouse will have experienced a new qualifying event that gives her the COBRA right to elect an additional 36 months of the alternative coverage! Treas. Reg. § 54.4980B-6, Q&A 7 and -3, Q&A-1(h), examples 4 and 5."

[Guest gaham]

Thanks to Christine and Dave. Both of you bring up an issue that I wanted to correct in my original post. I said that I believed that the spouse/dependent would have a second qualifying event when the retiree becomes entitled to Medicare giving them the right to 36 months coverage from the date of the first qualifying event. Actually, the reg. that I cited says that if the spouse/dependent would lose alternative coverage as a result of a qualifying event, the spouse/dependent must be given the opportunity to elect to continue that alternative coverage, with a maximum coverage period of 36 months measured from the date of THAT QUALIFYING EVENT. Thus, in my original example, spouse/dependent should be given the opportunity to elect 36 months of COBRA coverage when the retiree becomes entitled to Medicare measured from the date the retiree becomes Medicare entitled. I still find this to be a strange result that is not consistent with the statutes.