What are COBRA Qualifying Events?

On April 7, 1986, the Consolidated Omnibus Budget Reconciliation Act (COBRA) was enacted, granting employees, their spouses, and children the ability to continue their healthcare coverage from an employer-sponsored program when they would otherwise lose coverage. However, loss in coverage must be due to a specific event, officially referred to as a  “COBRA qualifying event”.

This article lists and explains the 7 COBRA qualifying events under federal law: what they are, who’s affected, and how HR professionals can manage them when the time comes to provide continued coverage.

COBRA Qualifying Event Definition

As detailed under COBRA law, a qualifying event is a specific event that causes an employee or a qualified beneficiary of the employee to lose group health plan coverage. 

Who is a Qualified Beneficiary?

Generally, qualified beneficiaries include the following individuals:

• The employee (and in some cases, retirees)
  
• The employee’s spouse or former spouse (eligibility for domestic partners depends on the plan’s definitions)
  
• Dependent children of the employee
  

What Are the 7 COBRA Qualifying Events?

In accordance with the federal COBRA law, there are seven events that can cause someone to lose healthcare coverage, which are considered qualifying events. 

They are:

1. Voluntary or involuntary termination of the employee’s employment for reasons other than gross misconduct
   
   • Examples of Voluntary Termination: If an employee quits, resigns for another job, retires, moves to a new location, or pursues educational opportunities
   • Examples of Involuntary Termination: If an employee is laid off due to business reasons or fired for poor performance, or chronic absenteeism
2. A Reduction in hours of employment for the covered employee
3. The covered employee becomes entitled to Medicare, causing a loss of coverage under the group health plan
   
   • Entitlement to Medicare requires the employee to be both eligible and enrolled in Medicare benefits
4. A divorce or legal separation between the spouse and the covered employee
5. The death of a covered employee
6. The covered employee’s dependent child loses their status as a dependent under the rules of the health plan
   
   • In accordance with the Affordable Care Act (ACA), group health plans that offer coverage to children of the covered employee must have the coverage available until the adult child reaches the age of 26 years old
7. The employer providing a group health plan declares bankruptcy (only applies to retirees)

Important to note is that the qualifying events for an employee, their spouse, dependent, or other qualified beneficiary differ. 

COBRA Qualifying Events Chart

The following chart breaks down each qualifying event and which qualified beneficiaries can obtain continuation coverage because of that qualifying event.

*Applies to retired employees, their spouses, and dependent children, only

Notes Regarding COBRA Qualifying Events

Notification Requirements for Qualifying Events

When a COBRA qualifying event occurs, employers must ensure the proper notification requirements are being met. For most qualifying events, the employer is responsible for notifying the plan administrator when they occur. If the qualifying event regards divorce or an employee’s child losing dependent status, the employee or a qualified beneficiary is required to notify the plan administrator.

Because COBRA continued coverage requires a significant amount of communication with health care plan administrators, it's best to leverage carrier feeds for COBRA benefits directly with health plan providers to ensure secure and efficient communication.

Duration of Coverage for Each Qualifying Event

The following chart lists the duration of coverage for each Qualifying Event:

Note: Continued coverage under COBRA can have an extended maximum coverage duration if more than one Qualifying Event occurs, if the employee or a Qualified Beneficiary becomes disabled (29 months instead of 18 months of coverage), or as a result of state-specific mini-COBRA laws. 

Handling COBRA Compliance and Continued Coverage

As an extension to the benefits administration process, many HR professionals find that managing COBRA continuation of coverage, tracking qualifying events, and maintaining compliance can be a significant administrative burden. With such complex requirements, it’s best to approach COBRA benefits management with a comprehensive benefits administration solution capable of performing continued coverage tasks or a dedicated COBRA Administration solution that helps ease the confusion of continued coverage management.

Utilizing a solution capable of handling COBRA administration can streamline employee eligibility monitoring, premium remittance, and general communications with health plan providers. If your company needs assistance with COBRA Administration, contact us today.