Solving COBRA Complexities: College Plans & COBRA Special Enrollment

Complex COBRA Events & Best Practices | Special Enrollment Rights | College Students and COBRA Rights
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Recently, an Employer presented the following questions regarding special enrollment options for COBRA beneficiaries. In this article, we’ll visit the topic of Special Enrollment Rights, specifically for dependent children participating in college sponsored health plans.
Can college students receive COBRA continuation coverage? Let's take a closer look.

Scenario:
An enrolled COBRA beneficiary’s son is presently in college and enrolled in his college’s health plan. The health plan expires this year, and her son will no longer be eligible for that COBRA continuation coverage through his college. For the purposes of this article, let’s call the COBRA beneficiary, “Nancy” and her son, “Greg”. 

Question: Can Nancy, the covered COBRA qualified beneficiary add her son, Greg as a covered dependent to her health coverage under COBRA?

Answer: Yes. Employers may be surprised to learn that when the dependents of current employees lose eligibility for coverage, the plan must permit the dependent or employee to special enroll.
COBRA members are to have similar rights as active employees, so their dependents must be treated similarly to how active employee dependents will be treated in cases when coverage eligibility under is no longer available for a variety of reasons.

Under the Code of Federal Regulations, 29 CFR 2590.701-6(a), a plan must permit loss-of-coverage special enrollment upon: (1) loss of eligibility for group health plan coverage or health insurance coverage; and (2) termination of employer contributions toward group health plan coverage.
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Because Nancy’s son is going to experience a loss-of-coverage where COBRA continuation is not an option for him through the college plan, he will be allowed to special enroll as a covered dependent under his mother’s COBRA health plan subject to that plan’s eligibility and maximum COBRA time-period (in this instance 18 months maximum from his mother’s original event date).
Note that Greg and Nancy have certain responsibilities as well, such as reporting this event to the Plan within the allotted time-frame in order to receive the special enrollment option.

What happens if Greg (covered dependent) turns 26 while on his mother’s COBRA continuation coverage? Does he then lose his right to COBRA due to “aging out” of the plan? 

This is an excellent question for Plan Administrators to be familiar with, given that most commonly, covered dependents do age out of most health plans upon reaching the dependent’s 26th birthday.

Does the employer need to offer Greg a new COBRA election period or extend the current maximum coverage period when he turns 26 (ages out of the plan)?

COBRA does not require a new COBRA election or special enrollment rights extension in the scenario described when the covered dependent turns 26 even though ordinarily, turning 26 would be a COBRA qualifying event. Under COBRA rules however, Greg won’t lose his coverage before the end of the maximum coverage period (under his mother’s original qualifying event, which was employment termination), unless he fails to pay timely premiums or voluntarily waives the coverage. However, the plan should respond to Greg within 14 days of his notice of turning age 26, advising him that there will be no extension to his COBRA eligibility period nor will there be a new COBRA election.

Even though the Greg, the covered dependent described in our earlier scenario will not receive a second event election notice, best practice will be to notify him that his current COBRA can continue until the end of the maximum period of coverage availability ends. Further, it is recommended that as an additional step, a ‘Notice of Unavailability’ be issued to him explaining that he will not receive a second COBRA election opportunity when he turns 26 while covered under his mother’s original COBRA qualifying event.

We believe that best practice for issuing this notice includes carefully tailored verbiage so as to not confuse the dependent, such as modifying the title, as he is not losing his COBRA continuation coverage, but rather is being informed that no extension and no additional election opportunity will occur as a result of his turning age 26.

Want to learn more about Special Enrollment rights such as required time-frames, plan responsibilities and deadlines? 

​Join forces with the CobraHelp team today!

Sources:
U.S. Department of Labor | https://webapps.dol.gov/elaws/ebsa/health/employer/1C17.asp
Thomson & Reuters EBIA Resources
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