COBRA Disability Extension

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COBRA Disability Extension

By Brian Gilmore | Published June 22, 2018

Question: When is the COBRA disability extension available, and how does it interact with Cal-COBRA?

Compliance Team Response:

COBRA Maximum Coverage Period
Where available, the COBRA disability extension increases the maximum coverage period from 18 to 29 months:

18 Months:

29 Months:

36 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:

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:

  1. Longer than the federal disability extension (18 months vs. 11 months);
  2. Less expensive than the federal disability extension (110% vs. 150%); and
  3. Available to everyone (not limited to 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 to 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.

Regulations:

Treas. Reg. §54.4980B-7, Q/A-4(c):
(c) In the case of a qualifying event that is a termination of employment or reduction of hours of employment, the maximum coverage period ends 18 months after the qualifying event if there is no disability extension, and 29 months after the qualifying event if there is a disability extension.
See Q&A-5 of this section for rules to determine if there is a disability extension. If there is a disability extension and the disabled qualified beneficiary is later determined to no longer be disabled, then a plan may terminate the COBRA continuation coverage of an affected qualified beneficiary before the end of the disability extension; see paragraph (a)(6) in Q&A-1 of this section.

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.
(c) The requirement of this paragraph (c) is satisfied if an individual (whether or not the covered employee) who is a qualified beneficiary in connection with the qualifying event described in paragraph (b) of this Q&A-5 is determined under Title II or XVI of the Social Security Act (42 U.S.C. 401-433 or 1381-1385) to have been disabled at any time during the first 60 days of COBRA continuation coverage. For this purpose, the period of the first 60 days of COBRA continuation coverage is measured from the date of the qualifying event described in paragraph (b) of this Q&A-5 . . .
(d) The requirement of this paragraph (d) is satisfied if any of the qualified beneficiaries affected by the qualifying event described in paragraph (b) of this Q&A-5 provides notice to the plan administrator of the disability determination on a date that is both within 60 days after the date the determination is issued and before the end of the original 18-month maximum coverage period that applies to the qualifying event.

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 . . .
California Insurance Code §10128.59:

The Author
Brian Gilmore

Lead Benefits Counsel, VP, Newfront

Brian Gilmore is the Lead Benefits Counsel at Newfront. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law.

What are my benefits under Federal COBRA and Cal-COBRA?