When an employee loses coverage due to termination of employment, COBRA often gives the employee and eligible family members the option to continue health coverage. But what happens if that former employee later enrolls in Medicare while on COBRA? Can the spouse receive extended COBRA coverage as a second qualifying event?
The short answer is no, in most cases.
Example Scenario
An employee is terminated and elects COBRA coverage for himself and his spouse. Later, during the COBRA coverage period, the former employee enrolls in Medicare, and his own COBRA coverage ends early.
A common question that comes up is whether the spouse can now receive a 36-month COBRA extension due to the employee’s Medicare entitlement.
Why the Answer Is No
Under COBRA rules, when a qualified beneficiary becomes entitled to Medicare after electing COBRA, that individual’s COBRA coverage may end early. However, this early termination applies only to the person who became entitled to Medicare.
That means the spouse or dependent children who are still covered under COBRA generally keep their COBRA rights and coverage for the original 18-month maximum coverage period.
What Counts as a Second Qualifying Event?
COBRA does allow certain second qualifying events to extend coverage for spouses and dependents up to 36 months from the original event. These events may include:
- Death of the covered employee
- Divorce or legal separation
- A dependent child losing dependent status under the plan
These events must occur after the original qualifying event, such as termination of employment or reduction in hours.
Why Medicare Usually Does Not Qualify
The IRS has ruled that an employee’s Medicare entitlement is not a second qualifying event if it would not cause the spouse or dependents to lose coverage under the health plan. Because of Medicare Secondary Payer rules, most employer-sponsored health plans cannot terminate active employee coverage simply because the employee becomes eligible for Medicare. As a result:
- Medicare entitlement rarely causes a loss of coverage
- It rarely qualifies as a first COBRA event
- It also rarely qualifies as a second COBRA event
Key Takeaway
If a former employee enrolls in Medicare while on COBRA, their COBRA coverage may end early. But that Medicare entitlement usually does not trigger an extended COBRA period for a spouse or dependents.
Need Help Navigating COBRA Rules?
COBRA administration can be more complex than it appears. Understanding qualifying events, extensions, notices, and timelines is critical to staying compliant. Medcom can help simplify the process and reduce administrative stress. Contact us to get started.
Resource: Larry Grudzien, Attorney at Law.
