Source: https://www.theabdteam.com/blog/cobra-disability-extension/
Timestamp: 2020-05-30 22:22:50
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COBRA Disability Extension - ABD Insights Blog
Posted on June 22, 2018 by Brian Gilmore
Question: When is the COBRA disability extension available, and how does it interact with Cal-COBRA?
COBRA Maximum Coverage Period
Where available, the COBRA disability extension increases the maximum coverage period from 18 to 29 months:
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):
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.
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
(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.
https://www.dmhc.ca.gov/HealthCareinCalifornia/TypesofPlans/KeepYourHealthCoverage(COBRA).aspx#.WbLc48h96Uk
Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee
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