Final and prop. COBRA regs.

• Author: Patterson, Martha Priddy
• Position: Consolidated Omnibus Reconciliation Act of 1985; IRS regulations

A mere 12 years after the first proposed Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) health care continuation regulations under Sec. 4980B were released, the IRS has issued final regulations and additional proposed regulations. In the Service's defense, this has been one of the few times the IRS could catch up the regulations to Congress's frequent changes to the COBRA statute. (Because the Department of Labor has authority over the notice and disclosure portions of COBRA, the new IRS regulations do not address these issues.) The new regulations restate the proposed regulations in many cases and add clarifying examples.

Final Regs. Changes

COBRA required even if prior coverage under another plan. The regulations recognize the language of the statute, after clarification by the U.S. Supreme Court in Geissal v. Moore Medical Corporation, to specifically state that the fact a qualified beneficiary had coverage under another plan while working for the employer will not permit that employer to deny COBRA coverage. The fact that an individual was entitled to Medicare before the qualifying event will also not disqualify that individual for COBRA coverage.

No obligation to offer "core" coverage separately. The final regulations do not require the plan sponsor to offer "core coverage" and "noncore coverage," such as dental and vision coverage, separately.

Loss of coverage. Loss of coverage means coverage under the same terms and conditions. If the qualifying event results in an increase in premiums or contributions by the employee, the individual is entitled to COBRA coverage. (This provision is likely to be used relatively infrequently, given that the increase in coverage cost even under a reduction in hours, etc., is unlikely to be as high as the COBRA premiums.)

Medicare "entitled." Medicare "entitled" means actually enrolled in Medicare, not merely eligible for Medicare. Assuming the individual was not enrolled in Medicare prior to the qualifying event, enrollment in either Medicare Part A or B will be sufficient to terminate COBRA coverage for such individual. (Given that enrollment in Medicare Part A is automatic when one applies for Social Security at age 65 or older, most 65 year-olds who begin receiving Social Security after the qualifying event can have COBRA coverage terminated.)

Plan year. The plan year is the year designated in the plan document. If there is no year designated, the plan year is the deductible/limit...