Question: When is the COBRA disability extension available, and how does it interact with Cal-COBRA?
Compliance Team Response:
COBRA Maximum Coverage Period
Where available, the COBRA disability extension increases the maximum coverage period from 18 to 29 months:
- Termination of employment
- Reduction of hours
- Death of employee
- Divorce or legal separation from employee
- Child reaches age 26
Note that the 18-month events can be extended by another 18 months in California (for a total of 36 months) through Cal-COBRA, but only for medical and only if the plan is fully insured.
Conditions for Disability Extension to 29 Months
The disability extension from 18 – 29 months is available where:
- The COBRA qualifying event is the employee’s termination of employment or reduction in hours;
- The qualified beneficiary is determined by SSA to have been disabled at any time during the first 60 days of COBRA coverage;
- The qualified beneficiary notifies the plan of the SSA determination within 60 days of the SSA determination; and
- The qualified beneficiary notifies the plan of the SSA determination before the end of the 18-month standard maximum coverage period.
Note that COBRA rate moves from 102% to 150% for the period of the disability extension (months 19 – 29) due to the fact that disabled former employees are likely to cause a greater expense to the plan.
Interaction with Cal-COBRA Extension to 36 Months for Fully Insured Medical Plans
The federal COBRA disability extension is generally irrelevant where the coverage is a fully insured major medical plan in California.
The Cal-COBRA extension to 36 months is:
- Longer than the federal disability extension (18 months vs. 11 months);
- Less expensive than the federal disability extension (110% vs. 150%); and
- Available to everyone (not limited those who are disabled and meet certain conditions).
Where an individual utilizes the 18-month Cal-COBRA extension for fully insured medical, that extension overlaps with any federal COBRA disability extension that may be available. Therefore, an individual generally would have no reason pursue the federal COBRA disability extension for a fully insured medical plan.
In that case, the disability extension would be relevant only for the dental and vision federal COBRA coverage. The 18-month Cal-COBRA extension applies only to major medical coverage—so dental and vision coverage are not eligible for extension through Cal-COBRA.
Treas. Reg. §54.4980B-7, Q/A-4(c):
(c) In the case of a qualifying event that is a termination of employment or reduction of hours of employment, the maximum coverage period ends 18 months after the qualifying event if there is no disability extension, and 29 months after the qualifying event if there is a disability extension. See Q&A-5 of this section for rules to determine if there is a disability extension. If there is a disability extension and the disabled qualified beneficiary is later determined to no longer be disabled, then a plan may terminate the COBRA continuation coverage of an affected qualified beneficiary before the end of the disability extension; see paragraph (a)(6) in Q&A-1 of this section.
Treas. Reg. §54.4980B-7, Q/A-4:
Q-. 5. . How does a qualified beneficiary become entitled to a disability extension?
A-5. (a) A qualified beneficiary becomes entitled to a disability extension if the requirements of paragraphs (b), (c), and (d) of this Q&A-5 are satisfied with respect to the qualified beneficiary. If the disability extension applies with respect to a qualifying event, it applies with respect to each qualified beneficiary entitled to COBRA continuation coverage because of that qualifying event. Thus, for example, the 29-month maximum coverage period applies to each qualified beneficiary who is not disabled as well as to the qualified beneficiary who is disabled, and it applies independently with respect to each of the qualified beneficiaries. See Q&A-1 in §54.4980B-8, which permits a plan to require payment of an increased amount during the disability extension.
(b) The requirement of this paragraph (b) is satisfied if a qualifying event occurs that is a termination, or reduction of hours, of a covered employee’s employment.
(c) The requirement of this paragraph (c) is satisfied if an individual (whether or not the covered employee) who is a qualified beneficiary in connection with the qualifying event described in paragraph (b) of this Q&A-5 is determined under Title II or XVI of the Social Security Act (42 U.S.C. 401-433 or 1381-1385) to have been disabled at any time during the first 60 days of COBRA continuation coverage. For this purpose, the period of the first 60 days of COBRA continuation coverage is measured from the date of the qualifying event described in paragraph (b) of this Q&A-5 (except that if a loss of coverage would occur at a later date in the absence of an election for COBRA continuation coverage and if the plan provides for the extension of the required periods (as described in paragraph (b) of Q&A-4 of this section) then the period of the first 60 days of COBRA continuation coverage is measured from the date on which the coverage would be lost). However, in the case of a qualified beneficiary who is a child born to or placed for adoption with a covered employee during a period of COBRA continuation coverage, the period of the first 60 days of COBRA continuation coverage is measured from the date of birth or placement for adoption. For purposes of this paragraph (c), an individual is determined to be disabled within the first 60 days of COBRA continuation coverage if the individual has been determined under Title II or XVI of the Social Security Act to have been disabled before the first day of COBRA continuation coverage and has not been determined to be no longer disabled at any time between the date of that disability determination and the first day of COBRA continuation coverage.
(d) The requirement of this paragraph (d) is satisfied if any of the qualified beneficiaries affected by the qualifying event described in paragraph (b) of this Q&A-5 provides notice to the plan administrator of the disability determination on a date that is both within 60 days after the date the determination is issued and before the end of the original 18-month maximum coverage period that applies to the qualifying event.
Treas. Reg. §54.4980B-8, Q/A-1(b):
(b) A group health plan is permitted to require the payment of an amount that does not exceed 150 percent of the applicable premium for any period of COBRA continuation coverage covering a disabled qualified beneficiary (for example, whether single or family coverage) if the coverage would not be required to be made available in the absence of a disability extension. (See Q&A-5 of §54.4980B-7 for rules to determine whether a qualified beneficiary is entitled to a disability extension.) A plan is not permitted to require the payment of an amount that exceeds 102 percent of the applicable premium for any period of COBRA continuation coverage to which a qualified beneficiary is entitled without regard to the disability extension. Thus, if a qualified beneficiary entitled to a disability extension experiences a second qualifying event within the original 18-month maximum coverage period, then the plan is not permitted to require the payment of an amount that exceeds 102 percent of the applicable premium for any period of COBRA continuation coverage. By contrast, if a qualified beneficiary entitled to a disability extension experiences a second qualifying event after the end of the original 18-month maximum coverage period, then the plan may require the payment of an amount that is up to 150 percent of the applicable premium for the remainder of the period of COBRA continuation coverage (that is, from the beginning of the 19th month through the end of the 36th month) as long as the disabled qualified beneficiary is included in that coverage.
California Insurance Code §10128.59:
- 10128.59. Continuing coverage for enrollees who have exhausted continuation coverage under COBRA
- (a) A health insurer that provides coverage under a group benefit plan to an employer shall offer an insured who has exhausted continuation coverage under COBRA the opportunity to continue coverage for up to 36 months from the date the insured’s continuation coverage began if the insured is entitled to less than 36 months of continuation coverage under COBRA. The health insurer shall offer coverage pursuant to terms of this article, including the rate limitations contained in Section 10128.56.
- (b) Notification of the coverage available under this section shall be included in the notice of the pending termination of COBRA coverage that is required to be provided to COBRA beneficiaries and that is required to be provided under Section 10128.54.
- (c) For purposes of this section, “COBRA” means Section 4980B of Title 26 of the United States Code, Sections 1161 et seq. of Title 29 of the United States Code, and Section 300bb of Title 42 of the United States Code.
- (d) This section shall not apply to accident–only, specified disease, hospital indemnity, CHAMPUS supplement, long–term care, Medicare supplement, dental–only, or vision–only insurance policies.
- (e) This section shall become operative on September 1, 2003, and shall apply to individuals who begin receiving COBRA coverage on or after January 1, 2003.
What are my benefits under Federal COBRA and Cal-COBRA?
- You have the same benefits as other employees in the same plan.
- If other employees have open enrollment periods when they can change from one plan to another, you can too.
- If the employer changes the employees from one plan to another, you change too.
- You have no restrictions because of pre-existing conditions.
- If the group plan offers specialized plans, such as dental or vision plans, they must be offered to you too. However, if you change from Federal COBRA to Cal-COBRA, these specialized plans do not have to be offered to you.
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