A Closer Look at…

The Disability Extension of COBRA

The federal COBRA law allows a terminating employee to stay on their employer's health plan for up to 18 months (36 months for dependents losing coverage).

However, if you must leave work due to disability, it is 29 months before you can become eligible for Medicare. That's because there is a five month waiting period before Social Security Disability (SSDI) benefits start and 24 months of SSDI benefits before Medicare begins.

This potential 11 month gap in coverage was filled in 1989 with the COBRA Disability Extension, sometimes called OBRA after the law that enacted it.

If this is of interest to you please read this article completely. Some of the rules stated here may cause you to think early on that you can't get the extension, but later in the article, I describe some errors that employers have made and granted coverage when they didn't have to.

This Disability Extension provision says that someone who is on COBRA can continue on it for up to an additional 11 months after the initial 18 months period is over if:

1. They apply for Social Security Disability (SSDI) and are awarded benefits during the first 18 months of COBRA; AND
2. Social Security determines that the date of onset of the disability was within 60 days for losing coverage; AND
3. The Plan Administrator is informed of that within 60 days of receipt of the Notice of Award letter from Social Security by receiving a copy that letter.

What that means in English is:

1. You must apply early enough in your initial 18 months COBRA so that Social Security will have time to process your claim, approve it, and send you the Notice of Award letter.
If you are initially denied and you appeal and are approved, but the appeal and approval doesn't happen until your COBRA ends, then you are not eligible for the extension.

2. When you receive your Notice of Award letter, it will say something like, "We determine that you became disabled on (Month, Day, Year)." That is the Onset Date. It is often the day after you left work, but it doesn't have to be. That Onset Date must be within 60 days of the termination or reduction in hours that caused the loss of coverage that triggered the COBRA extension.

For example, if you left work on August 13, but your coverage didn't end until November 13 because of the Family and Medical Leave Act, the Onset Date must be within 60 days of August 13.

3. The COBRA administrator must get a copy of the Notice of Award letter. This is usually your employer, but can also be an outside COBRA administrator that your employer has contracted with.

A good general rule is that the person or group who gets the COBRA premiums each month is the one to whom you should you send a copy of the Notice of Award letter. (Make sure you keep the original)

I recommend that my clients send a letter to the administrator with a copy of the Notice of Award letter stating something like:

"Enclosed is a copy of my Notice of Award from Social Security. It is my understanding that this qualifies me to continue on COBRA for an additional eleven months. Please confirm in writing that I am eligible for this extension."

Be aware that the premiums go up substantially during the Disability Extension. While you are on regular COBRA you pay no more than 102% of what the total premium is, both the employee and employer's portion. However, during the Disability Extension, the rates go up to 150% of the premium. This means that if you were paying $204 per month for COBRA, your premium will be $300 per month under the Extension.

Does this mean that if you don't meet those three requirements that you can't extend your COBRA? Technically yes, but not everyone understands the requirements.

If your employer has hired an outside COBRA administrator, it will be very difficult to get an exception. They promised to save your employer money when they contracted with them, and, even though you're paying the premium yourself, they know that persons who continue coverage on COBRA usually incur claims well over the amount they pay in premium. Therefore, COBRA administrators try to keep as many people as they can from extending their coverage so if you are one day late sending in the Notice of Award, then you will be refused the extension.

If, however, your employer is administering COBRA themselves, they may not totally understand the rules. Sometimes, if you just call the employer and say something like, "I understand that I can keep my COBRA if I'm disabled. What proof do you need from me?" I have had clients whose coverage was continued just with a phone call.

But don't count on it happening for you. If you leave work due to disability, make sure extending your COBRA coverage is part of the list of things you need to do.

---

Bio | Site Goals | Contact Me | Archives | Testimonials | Home
Privacy Policy | Webmaster
copyright 2002, Jacques M. Chambers