The Consolidated Omnibus Reconciliation Act (COBRA) of 1985 amended the law to require
that group health plans of covered employers provide employees and certain family
members the opportunity to continue health care coverage under the GHP in certain
instances (called qualifying events) where coverage under the GHP would otherwise
Qualifying events are:
The death of the covered employee.
The termination (other than by reason of such employee's gross misconduct), or reduction
of hours, of the covered employee's employment.
The divorce or legal separation of the covered employee from their spouse.
The covered employee becoming entitled to benefits under title XVIII (Medicare) of
the Social Security Act.
A dependent child ceasing to be a dependent child under the generally accetable requirements
of the plan.
Individuals covered under COBRA are never covered under a GHP by reason of current employment status which is a requirement
for the SEP or premium surcharge rollback. Even when COBRA coverage is in effect by
reason of a reduction of employment hours, as distinguished from termination of employment,
it is in effect because the individual no longer qualifies for the regular group health
plan based on employment.
Similarly, COBRA coverage for qualified dependents is not based on current employment
status even when the employee continues to qualify for regular GHP coverage. That
is, in the case of divorce or legal separation, or a dependent child ceasing to be
a dependent child, the qualified dependent is eligible for coverage solely by virtue
of the provisions of the COBRA statute.
NOTE: The rules above apply only for individuals who do not enroll in SMI during the 8-month
period following the last month of coverage based on current employment status.