Originally published August 2005
Our clients ask us some very interesting benefits questions. Here are some of their COBRA questions and the answers to them.
Can a spouse decline COBRA coverage for the other spouse?
No. A covered employee can elect COBRA coverage for his or her spouse, and vice versa. But neither spouse can decline COBRA coverage for the other spouse, who always has an independent right to elect COBRA coverage.
Can a plan require COBRA premium payments to be made on a weekly basis?
No. The plan must allow COBRA premium payments to be made on a monthly basis, but can permit the qualified beneficiary to elect an alternative payment interval.
If a qualified beneficiary mails his or her COBRA premium to the plan, when is this payment considered made?
The payment is considered made on the date that it is sent to the plan - not when it is received by the plan.
Can the plan require the initial COBRA premium payment to cover the period through the end of the month in which this initial payment is due?
The answer to this question is not entirely clear, and this practice is not uncommon. A conservative interpretation of the applicable COBRA rules suggests that the initial COBRA premium payment can only cover the period through the end of the month immediately preceding the month when the initial premium payment is due.
Is a plan required to accept a COBRA premium made on behalf of a qualified beneficiary?
The COBRA rules do not specify who can make a COBRA premium payment but do require a plan to accept a payment made on behalf of a qualified beneficiary, regardless of by whom it was made.
Does a plan have to accept a late premium payment?
In general, a plan is not required to accept a late premium payment (that is, a payment made after the deadline for the initial payment or after the 30-day grace period in the case of a subsequent premium payment). The one exception to this rule occurs when the qualified beneficiary is mentally or physically incapacitated, causing the suspension of the deadline for COBRA premium payments.
If an employee did not elect plan coverage for his or her spouse prior to termination from employment, can the spouse elect COBRA coverage?
No. In order to be a qualified beneficiary, the spouse must have had plan coverage prior to the qualifying event (that is, the other spouse's termination from employment). Can a qualified beneficiary change his or her coverage under the plan during the plan's open enrollment period? The general rule is that a qualified beneficiary can only elect to continue the coverage that he or she had under the plan immediately before the qualifying event leading to the COBRA election. The exception to this rule occurs when the plan offers an open enrollment period to similarly situated active employees who have not had a qualifying event. In this situation, the qualified beneficiary has the same open enrollment-period rights (such as the right to change coverage) as the similarly situated active employee. This same exception permits a qualified beneficiary to elect coverage during an open enrollment period for a spouse or dependent who is not a qualified beneficiary, if a similarly situated active employee who has not had a qualifying event can do so during the open enrollment period.
Is a non-FMLA leave of absence a COBRA qualifying event?
In some instances, a non-FMLA (Family Medical and Leave Act) leave of absence is a COBRA qualifying event. Any leave of absence is a reduction in hours. So, if an employee's non-FMLA leave of absence causes him or her to lose plan coverage, this leave of absence is a COBRA qualifying event. A loss of coverage occurs when there is any change in the terms and conditions of the coverage in effect immediately before the qualifying event. Sometimes, for example, a plan will require an employee to pay a greater portion of the premium while he or she is on a non-FMLA leave. In this instance, the employee's leave of absence is a COBRA triggering event.
Does Medicaid entitlement permit early termination of COBRA coverage?
No. Although COBRA coverage can be terminated when a qualified beneficiary subsequently becomes entitled to Medicare benefits, this coverage cannot be terminated when a qualified beneficiary becomes entitled to Medicaid after electing COBRA coverage.
A partner in RJ&L's Colorado Springs office, Jan A. Steinhour practices exclusively in the area of employee benefits planning and administration. Her experience includes assistance to employers with all types of pension and welfare benefits plan issues involving fiduciary responsibility, plan administration, benefits claims, and federal and state tax and labor law consequences. She frequently assists clients with the design, implementation, and maintenance of executive compensation programs, severance programs, health benefits, stock option plans, golden parachute arrangements, and tax-qualified retirement plans.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
