Medicare & COBRA Extensions for Spouses Explained

Medicare and COBRA:
​When a Covered Spouse Is Eligible for An Extension

It’s no secret that navigating Medicare can be a challenge all it’s own. But add COBRA compliance into the mix, and you’re sure to stumble upon an HR conundrum.
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Not to worry. Fortunately, there are Medicare and COBRA Experts who are able to help with frequently asked questions that pertain to an employee or retiree’s options to continue coverage, bridging the gap between active benefits and Medicare entitlement. 

In this article, we’ll visit Medicare & COBRA extension for spouses and a specific example of how a covered spouse’s coverage would be handled in the event that an employee’s COBRA coverage ceased due to Medicare entitlement.

First, let’s take a quick look at the often misunderstood term – “Medicare entitlement”. Contrary to popular belief, the term “Medicare Entitlement” when dealing with insurance related matters or regulatory compliance is actually referring to when an individual enrolled into Medicare, and  not referencing when that person became eligible for Medicare. For example, when we say that Sally Doe became entitled to Medicare as of 03/01/2023, what this means is that she was enrolled into Medicare, most commonly due to turning 65, effective 03/01/2023.

Next, to help simplify the complexity of determining a covered spouse’s eligibility for 36 or 18 months of COBRA when the primary insured becomes entitled to Medicare, let’s use a real life example.

Recently, an employer asked us how to handle the coverage of a retiree who is enrolled in COBRA continuation coverage with his wife now that the employer has been informed that the retiree had enrolled in Medicare in March of 2021.
For the purposes of this article, Medicare & COBRA extensions for spouses, let’s call the retiree Bob Sample and his wife Sally Sample.

Here’s the gist:
Bob turned 65 in March 2021, and so he enrolled into Medicare effective 03/01/2021. Bob’s covered spouse Sally, is not yet entitled to Medicare, and needs coverage until she reaches age 65. Under COBRA, the law addresses the rights of dependents in certain circumstances to extend COBRA from 18 months (regular termination of employment qualifying event when Bob retired) to 36 months (maximum period of COBRA continuation coverage).

The thing is, not all qualified beneficiaries are eligible for this extension and eligibility dates and timeframes impact that determination, which makes Medicare + COBRA challenging to navigate.

To determine the answer to the Employer’s question, we must first look at the timing of Bob’s Medicare entitlement and compare that to his original qualifying event date.
Bob and Sally Sample became eligible for COBRA on 04/01/2022, which is after Bob’s Medicare entitlement that occurred back on 03/01/2021.

Because of this fact, and the fact that the original qualifying event was an 18-month event such as termination of employment, in this case Sally is eligible for the COBRA extension to 36 months total from the original event date.

Sally is allowed to utilize COBRA continuation coverage from 04/01/2022 through 02/29/24, a total of 36 months.

This is because Bob’s Medicare entitlement occurred on or before the COBRA qualifying event date.

Alternatively, there are many cases in which the qualified beneficiary is not eligible for the 36 months of continuation coverage when the Medicare entitlement of the primary insured occurs after the COBRA qualifying event.

RESPONSIBILTIES:

Qualified beneficiaries should report changes such as these, or requests for Medicare & COBRA extensions for spouses, and changes in coverage to the Plan Administrator before the close of the initial 18 – month period of COBRA continuation coverage and ensure that they have requested these changes within appropriate timeframes and in accordance with Plan terms.
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Employers should ensure that their employees and COBRA participants are aware of their rights and responsibilities, including how to inquire about a spouse’s eligibility for a COBRA extension of coverage.

Sources:
U.S. Department of Labor  EBIA Advisors| https://webapps.dol.gov/elaws/ebsa/health/employer/1C17.asp
ECFR
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