November 2, 2017

Interaction of Medicare and COBRA (article)

A recently issued IRS Information Letter explains the interaction between Medicare and COBRA continuation coverage.  While this Information Letter does not break new ground, it provides a good summary of issues that frequently arise as it relates to the COBRA duration and Medicare coverage. 


In summary, termination of employment or reduction in hours would give rise to up to 18 months of COBRA continuation coverage for all qualified beneficiaries, including the employee and any covered dependents.  The continuation period may be extended up to 29 months if the qualified beneficiary is determined to be disabled by the Social Security Administration at any time prior to the 60th day following the qualifying event. If the employee was covered by Medicare prior to the date of the COBRA election, the employee remains entitled to the right to elect COBRA for up to 18 months.  Covered dependents would potentially be entitled to an additional period of time of up to 36 months of COBRA, measured from the date of the individual’s Medicare entitlement.


Not addressed in the Information Letter is the situation of Medicare coverage that arises after the date COBRA is elected.  If Medicare coverage begins after the date the individual elects COBRA, then the Medicare coverage can terminate COBRA for the affected employee.  This event does not provide an extended period of coverage for covered dependents.


The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.   

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