Employers and plan administrators should make sure they are aware of which employees are entitled to Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage. Problems can arise if COBRA is not offered to someone who is eligible to elect COBRA coverage or if it is offered to someone who is not eligible.
Under the COBRA rules, a qualifying event triggers COBRA coverage for the qualified beneficiary (QB). A QB is an individual covered by a group health plan on the day before the qualifying event. A QB can be the employee, the employee’s spouse and/or the employee’s dependent children. In some cases, a retired employee (and his or her spouse and/or dependent children) can be a QB. In addition, a child born to or placed for adoption with the covered employee during the COBRA coverage period is considered a QB. Agents, independent contractors and directors could also be QBs depending on the plan’s eligibility rules.
A qualifying event is a specified triggering event that:
The triggering events that will give rise to COBRA coverage depend on who is affected. The following list explains which events are considered qualifying events for each type of individual:
In addition to being familiar with the rules provided by the COBRA statute, it is important to look at the terms of the plan document. To be a qualifying event, the event must cause a loss of plan coverage. Just because a certain event is considered a triggering event under COBRA does not mean it will cause a loss of coverage under the plan. For example, COBRA allows legal separation of the employee and his or her spouse to be a qualifying event, but the plan may only terminate coverage if the employee and spouse are divorced.