Question: We're planning to
eliminate coverage for spouses and dependent children under our
company's group health plan. Do we need to offer COBRA to
spouses and dependent children who are covered at the time we amend
Answer: Under these circumstances, you
aren't required to offer COBRA to spouses. However, you may
have to do so for dependent children. A COBRA qualifying event
requires a loss of coverage caused by one of the triggering events
listed in the statute.
For spouses, the triggering events include the covered
Termination of employment
Reduction of hours
Death, divorce or legal
Entitlement to Medicare
"Termination or amendment of the group health plan"
isn't a listed triggering event, so spouses will have no COBRA
event, even though they'll lose coverage when your plan is
For dependent children, the answer isn't so clear. Under the
statute, "a dependent child ceasing to be a dependent under
the generally applicable requirements of the plan" is a COBRA
triggering event. When you amend your group health plan to
eliminate coverage for dependent children, the children will cease
to be eligible dependent children under the plan and, thus, may
have a COBRA qualifying event.
On the other hand, if eligibility for all dependent children is
eliminated, there are no "generally applicable
requirements" with respect to these children. Arguably, a
triggering event involving loss of dependent status can occur only
when there's a change in the circumstances of a particular
dependent with respect to his or her eligibility for otherwise
Due to the unclear statutory requirement, employers and plan
administrators should obtain legal advice and consult with any
insurers (including stop-loss insurers) before deciding whether to
offer COBRA to dependent children who lose coverage because of a
plan amendment. Although the most conservative approach would
appear to be to offer COBRA to the dependent children, insured
plans risk having to self-insure such coverage unless the insurer
agrees in advance that COBRA is appropriate for these
One further caution, if you're an employer subject to the
Affordable Care Act's shared responsibility requirements
(otherwise known as the "play or pay" provision), a plan
design that excludes dependent children may not be recommended.
Under the law, coverage must be offered to full-time employees'
children (defined, for this purpose, as children under age 26, but
not including foster children or stepchildren) in order to avoid
potential penalties under Internal Revenue Code Section 4980H.
Clearly, there are a variety of complexities to determining
whether you must provide COBRA coverage to dependents no longer
covered under your plan. As mentioned, be sure to work closely with
your benefits advisors to ensure you're on safe ground.
If you have questions about COBRA, please contact Ron
Present, Partner and Health Care Industry Group Leader, at
firstname.lastname@example.org or 314.983.1358.
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.
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