Is COBRA Coverage Available After the Death of the Employee?

Upon first glance, it may seem like an odd question. After all, how on earth would COBRA coverage apply after the death of an employee and how does that have anything to do with you as an Employer? In this article, we’ll discuss a few often overlooked aspects of continuation coverage-particularly,

those that apply to individuals who are incapacitated or deceased. You’ll learn why it is important for your HR department (and your employees) to understand why post-life benefits may be necessary, and more importantly, how they should be handled in accordance with the Federal mandates.

Let’s first visit a few fundamentals of COBRA and eligibility to better understand why incapacitated or deceased members should not be out of our mind’s eye when it comes to benefits.

• Qualified Beneficiary (aka QB) = a covered employee or dependent who has experienced a COBRA qualifying event such as termination of employment or reduced working hours.
• Qualifying Event (aka QE) = for COBRA this is a triggering event that causes a covered employee or dependent to lose coverage, typically due to a change in circumstance such as termination of employment, divorce, or aging out of a plan.
• Equitable Tolling = Tolling is a legal doctrine that allows for the pausing or delaying of the running of the period of time set forth by a statute of limitations, such as the tolling period that may be applied to the 60 day COBRA election period in cases of death or incapacitation. (Treas. Reg. §54.4980B-6, Q/A-6]

Pursuant to Treas. Reg. §54.4980B-6, Q/A-6, if a qualified beneficiary passes away or becomes incapacitated, then the legal representative of the QB, or the QB’s estate, or spouse may make a COBRA election on behalf of the Qualified Beneficiary.

Coverage may be necessary for those who have recently passed because there could be medical claims incurred between the time of the qualifying event, and the time of the death of the employee. The same can be said of individuals who have become incapacitated. Claims are often unpaid until COBRA enrollment can be secured. So long as the individual’s election is timely addressed by the legal representative such as power of attorney, then the QB is entitled to COBRA benefits. This happens simply by having the legal representative elect/enroll in continuation coverage for the qualified beneficiary, on his or her behalf.

If death/incapacitation occurs, then the 60-day election period may be tolled for the period during which the qualified beneficiary is without a legal representative (power of attorney). This means, for example, that the 60-day election period would cease running upon death until a legal representative such as Power of Attorney is appointed, and then the remaining 60 days would continue to run.

You may be wondering if COBRA has extended coverage for a surviving spouse. If death impacts the coverage of another qualified beneficiary (such as dependents), then the legal representative would have a right for the initial election and the other QBs may also have a second election opportunity effective with the loss of coverage upon death of the deceased QB, which would allow them to continue coverage for up to the 36-month maximum.

Of course, in order for such an election to be processed, insurance carriers or TPAs may require proof of legal representation such as proof of Power of Attorney along with any necessary enrollment forms or paperwork needed for processing the coverage enrollment request with the carriers.