In the past some employers interpreted the regulations to mean that loss of coverage had to be involuntary. The 1987 regulation stated that if Cobra beneficiaries were eligible for coverage from another group plan, then Cobra would not have to be offered, and if offered, could be terminated. The new regulations say that if an individual has any coverage, including Medicare, at the time of the qualifying event, then Cobra must be made available. Now, coverage can only be terminated if the Cobra beneficiary becomes covered after the date of the Cobra election. In other words, eligibility for Medicare is not a reason to terminate Cobra coverage.
Final regulations eliminate the concept of core versus non core benefits.
However, some large companies separately negotiate the prescription coverage with a specialty provider. If this arrangement is not part of the medical plan and has its own contract and summary plan description, then the Cobra beneficiary could select one plan or the other, or both. Initial notice of Cobra to active employees is absolutely mandatory . An employer must have documentation that all active employees were notified at home about their rights and beneficiary rights upon loss or reduction in coverage. If there is no proof of this notice, than there is an obligation of the employer to provide coverage to a Cobra eligible beneficiary even if that beneficiary elects coverage after the 60 day grace period.