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October 16, 2012 | Leave a Comment
During our recent COBRA webinar, we received a question regarding secondary events that had not specifically come up before. We would like to provide the answer with some specific examples for you here.
The question is:
What happens if a former employee and dependent(s) are currently on COBRA and the former employee experiences a second event? More specifically, what happens when an employee and dependent(s) are on COBRA and the former employee turns 65 making him Medicare entitled? Does the spouse get the additional months of Cobra up to 36 months for the secondary qualifying event?
The simple answer is “no”. Many of you may be shocked to hear this, so we have put together some basic examples to help clarify WHEN a secondary event will prolong COBRA entitlement.
Example 1) Employee terms before age 65 and takes COBRA, covering his/her dependents. Employee then becomes entitled to Medicare while on COBRA, and the employee comes off COBRA. The dependents can finish out the remaining 18 months of COBRA but do not get an extension. – THIS IS NOT A SECONDARY QUALIFYING EVENT
Example 2) Employee is actively working and turns 65. Employee becomes entitled to Medicare and drops off the group plan by his/her own choice to move to Medicare plan. Since the employee voluntarily drops off the group plan, the dependents are not offered Cobra. – THIS IS NOT A QUALIFYING EVENT
Example 3) Employee is actively working and turns 65 in July 2012. The employee becomes “entitled” to Medicare in July. He/she than decides to retire effective 12/31/2012. The employee is offered 18 months of COBRA from the COBRA qualifying event which was December 31st. The spouse and dependents are offered 36 months of COBRA from when the employee became entitled for Medicare which was July. – THIS WOULD BE CONSIDERED A SECONDARY EVENT FOR THE DEPENDENTS TO BE ELIGIBLE FOR 36 MONTHS.
The end answer is that COBRA – especially when dealing with other factors such as Medicare entitlement, retirement, or other secondary events – is complicated. It is important to make sure that you research each situation thoroughly – or call Cornerstone – to ensure that the answers that you provide to your employees are correct the first time.