Who is entitled to COBRA continuation coverage?

By | March 4, 2015

There are three basic requirements that must be met for you to have the right to elect continuation coverage under COBRA:

  • Your group health plan must be covered by COBRA;
  • One should occur qualifying event ; and
  • You must be a qualified beneficiary for that event.


COBRA Plan Coverage

COBRA covers group health plans sponsored by an employer (private or state / local government) that employed at least 20 employees on more than 50 percent of its typical business days during the preceding calendar year. Both full-time employees as part-time are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of a full-time employee, this fraction being equal to the number of hours the employee worked part time divided by the hours an employee must work to be considered full time.


Qualifying events for COBRA Coverage

“Qualifying events” are events that cause an individual to lose group health coverage. The type of qualifying event determines who the qualified beneficiaries that event and the time period during which a plan must offer continuation coverage. COBRA establishes only the minimum requirements for continuation coverage. A plan may always choose to provide continuation periods longer coverage.


The following are qualifying events for a covered employee if they cause the covered employee to lose coverage:

  • Termination of the employee’s employment for any reason other than a case of “gross misconduct”; or
  • Reduction of employee work hours.


The following are qualifying events for the spouse and dependent child of a covered employee if they cause the spouse or dependent child to lose coverage:

  • Termination of the covered employee’s employment for any reason other than a case of “gross misconduct”.
  • Reduction in hours worked by the covered employee.
  • Covered employee becomes eligible for Medicare benefits.
  • Divorce or legal separation of the covered employee and spouse.
  • Death of the covered employee.

Besides listed above, the following is a qualifying event for a dependent child of a covered employee if they cause the child to lose coverage:

  • Loss of “dependent child” under the rules of the plan.


Qualified beneficiaries for COBRA

A qualified beneficiary is an individual who was covered by a group health plan on the day before a qualifying event occur that caused him to lose their coverage.Only certain individuals can become qualified beneficiaries due to a qualifying event and the type of qualifying event determines who can become a qualified beneficiary when this occurs. 


What does qualified beneficiaries mean for COBRA?

A qualified beneficiary must be a covered employee, spouse or former spouse of the employee or the employee’s dependent child. In certain cases involving the bankruptcy of the employer who is sponsoring the plan, a retired employee, spouse (or former spouse) retired employee and dependent children of retired employee may be qualified beneficiaries. In addition, any child who has had a covered employee or adopted during a period of continuation coverage is automatically considered a qualified beneficiary. Agents, independent contractors and directors participating in the group health plan may also be qualified beneficiaries.