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A Service of OnQue Technologies, Inc. |
Can Qualified Beneficiaries Elect COBRA Coverage For
Others?
Yes, but not
always. |
June 16,
2003
Santa Rosa, CA |
COBRA administrators and qualified beneficiaries are often uncertain about which individuals have the power to make
elections of COBRA coverage, for themselves and on behalf of other qualified beneficiaries. When election forms
are returned, employers need to be assured that the qualified beneficiaries who have chosen
continuation coverage have done so for the right individuals. We'll explain which qualified beneficiaries may make the COBRA
election and for whom they may make it.
Independent Election Rights
The general rule regarding election of coverage is that each qualified beneficiary connected
to a particular qualifying event has the right to elect COBRA coverage independently of whether
the other qualified beneficiaries choose to do so. The newly proposed Department of Labor (DOL)
COBRA regulations require that COBRA election notices contain a statement that specifically
explains this general rule. A summary of information pertaining to election by qualified
beneficiaries to be included in election notices under the newly proposed DOL rules follows.
- Identification of the qualifying event;
- Identification of each qualified beneficiary who is recognized
by the plan as being entitled to elect continuation coverage with respect to the specifically noted
qualifying event;
- A statement that each individual who is a qualified beneficiary with
respect to the qualifying event has an independent right to elect continuation coverage;
- A statement that a covered employee, or a spouse of a covered employee who is a qualified beneficiary, may
elect continuation coverage on behalf of all other qualified beneficiaries;
- A statement that a parent or legal guardian may elect continuation coverage
on behalf of a minor child; and
- A description of the premium amount that each qualified beneficiary will be required to pay for the continuation coverage
chosen.
Electing on behalf of others. The general rule that each qualified beneficiary has the right to independently elect coverage on his own behalf seems simple on its face. But confusion often arises because a covered employee
or an employee's covered spouse is also authorized to elect coverage on behalf of other
qualified beneficiaries in addition to themselves. And to further
complicate the matter, specific circumstances exist in which only the covered employee
and sometimes
even outside parties are permitted to elect coverage for certain eligible family members.
Assuming that timely election notices
have been properly delivered to all eligible qualified beneficiaries, which of them may elect continuation coverage,
and for whom?
One qualified beneficiary may elect for another. COBRA law
provides that each qualified beneficiary must be offered the opportunity to elect
COBRA continuation coverage under the group plan. The law also allows each qualified
beneficiary to elect coverage for all the others. And, if a covered employee, or the spouse, signs the election form without specifying on whose behalf COBRA election is being made, the plan administrator has the right to assume that
coverage is being elected uniformly for all other qualified beneficiaries in connection
with that particular qualifying
event.
Waiver of COBRA coverage.
Although each covered employee and covered spouse can elect for all other qualified
beneficiaries, either by affirmative election for each or by default when individual coverage
choices are not indicated, no individual can
reject COBRA coverage for any others. If a covered
employee rejects coverage for herself,
the plan administrator may
not assume that all other qualified beneficiaries are also rejecting coverage.
The covered spouse and dependent
children of the employee who rejects COBRA coverage are each entitled to elect coverage
regardless of the employee's
rejection. In other words, an administrator may not assume that coverage is being rejected for all
qualified beneficiaries when one qualified beneficiary rejects coverage for himself.
Example: Phil,
a covered employee terminates
employment. He and
his spouse are qualified beneficiaries, each with independent election rights. Phil may
elect for himself,
or elect for
both of them. He may affirmatively reject coverage for himself, but cannot decline for
his spouse. If Phil
simply fails to
elect
COBRA for either himself or his spouse, his spouse has the right to elect coverage for
herself and also for
him, within the 60-day election period,
unless Phil has
affirmatively waived his election right. And note that if a covered employee initially
rejected COBRA coverage while the
covered spouse elected it, the spouse could add that former employee to continuation
coverage during open enrollment,
just as an active employee could.
Special
Circumstances Can Affect The General Election Rule
Following are
specific situations that expand or modify the general rule that one qualified beneficiary
may elect for another.
- Election for dependents.
Under the general rule, a parent who is a qualified beneficiary may elect or reject coverage
for a covered minor dependent child even if that parent does not elect COBRA for herself. And a parent
or legal guardian who is not a qualified beneficiary is authorized to make an election of coverage for minor children when
necessary. It would seem likely that minor dependent children could not elect for themselves or other qualified
beneficiaries because minors cannot enter into binding contracts. But whether a
dependent child who is not a minor,
such as a 19-year-old college student, could elect coverage for his qualified beneficiary parents is not specifically
addressed in the rules.
- Incapacitated or deceased beneficiaries. Legal representatives, such as
guardians of incapacitated qualified beneficiaries, persons who have been given Powers of Attorney, and representatives
of estates of deceased beneficiaries who incurred medical claims but died before formally electing COBRA may
elect coverage for the beneficiaries they represent. To have this authority, they must be
determined under applicable state laws to be able to act as legal representatives on behalf of these persons.
The spouse of an
incapacitated or deceased qualified beneficiary may make the COBRA election on behalf of that person, regardless
of whether
the spouse is also a qualified beneficiary.
- Newly added dependents. Only children born to or
adopted by the covered employee during the period of that employee's COBRA coverage are
qualified beneficiaries.
Such children have the same rights as all other qualified beneficiaries, including the independent right to elect
continuation coverage. But note that new spouses, their children, and children of the covered employee who did not elect coverage
during the original election period, do not have the rights of qualified beneficiaries. The covered employee
may add these family members to coverage if the plan permits similarly situated active employees to add such persons.
But they may not independently elect coverage for themselves and they cannot continue coverage when the
employee ceases to be covered.
- TAA Special Election Period.
If an employee who has been certified
as eligible for benefits under the Trade Assistance Act (TAA) failed
to elect COBRA coverage after losing plan coverage due to a trade-related event,
that employee will be offered a second chance during another election period.
But family members of a TAA-certified employee cannot independently elect COBRA during this special election period -- only the employee may elect coverage for them.
- Open enrollment periods.
Each qualified beneficiary who has elected COBRA coverage has the right,
during open enrollment periods, to choose whether to switch to another plan in
the same way that active employees do. According to the Internal Revenue Code,
each qualified beneficiary member of the family could choose coverage for
themselves or other family members under a separate plan, even though the
family members of actively employed individuals could not do so.
Single notice rule. The DOL's newly proposed COBRA notice
regulations specifically permit the plan administrator to send a single notice
addressed
to a covered employee and the
covered spouse of the employee
so long as they reside at the same location according to the most recent
available information. Separate election notices must always be sent to qualified
beneficiaries who do not reside at the same address if the person's address is known.
The notice should specifically include all covered dependents even though a notice sent to a spouse
is treated as notification to all qualified dependent children who reside with that spouse.
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| Related COBRA
Tips™ |
| New COBRA Notice Rules Proposed by Labor Department |
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| Related Court
Cases |
| Sending a Separate COBRA Notice to Minor Children Was Not Necessary |
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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