Q.- One of our employees is turning age 65 and his spouse is covered under our health plan. He wants to drop our coverage and enroll in Medicare. His spouse wont be eligible for Medicare for another year. Do we give a COBRA election to the spouse?
A.- Probably not. COBRA requires employers to offer a COBRA election to qualified beneficiaries when there is a qualifying event identified in the COBRA statute that causes a loss of coverage under the plan. The COBRA statute identifies 6 potential events:
- Death of covered employee
- Termination of employment or reduction of hours
- Divorce or legal separation
- Dependent child's ceasing to be a dependent under the plan
- Entitlement to Medicare
- Bankruptcy
The event must cause a loss of coverage under the plan to be a COBRA qualifying event.
While entitlement to Medicare is listed in the COBRA statute as a potential COBRA event, it will be an actual COBRA qualifying event only if causes a loss of plan coverage. Under the Medicare secondary payer rules, many group health plans are prohibited from making Medicare entitlement an event that causes a loss of plan coverage. If your plan does not terminate an employee's coverage when the employee reaches age 65 or otherwise becomes Medicare eligible and if the employee can continue coverage under the plan, then voluntarily dropping coverage at age 65 will not be a COBRA qualifying event for the spouse.
