366 / Who is a qualified beneficiary for purposes of COBRA continuation coverage requirements?

With respect to a covered employee under a group health plan, a qualified beneficiary is any other individual who, on the day prior to that covered employee’s qualifying event, is a covered employee’s spouse or dependent child. A child born to or placed for adoption with a covered employee during the period of continuation coverage is included in the definition of qualified beneficiary.¹ Agents, independent contractors, and directors who participate in the group health plan may also be qualified beneficiaries.² Each qualified beneficiary has individual rights so that continuation decisions may be made on a person by person basis.

Employers are not required to offer COBRA continuation coverage to domestic partners, though some employers have negotiated with their insurance companies to do so.

If a qualifying event is a proceeding in a case under federal bankruptcy law, a qualified beneficiary is any covered employee who retired on or before the date of substantial elimination of coverage and individuals who, on the day before bankruptcy proceedings commence, were covered under the plan as a covered employee’s spouse, surviving spouse, or dependent child.³

Where a qualifying event is a change in employment status of a covered employee, qualified beneficiaries are the covered employee, spouse and dependent children covered under the plan on the day before the qualifying event.⁴

If a qualifying event is a covered employee’s death, divorce, or legal separation, or the covered employee’s entitlement to Medicare, the qualified beneficiaries are the covered employee’s spouse and dependent children who were covered under the plan the day before the qualifying event.⁵

If a qualifying event is the loss of a covered child’s dependent status, then that dependent child is the only qualified beneficiary.⁶

The term qualified beneficiary does not include an individual who is covered under a group health plan due to another individual’s election of COBRA continuation coverage and not by a prior qualifying event. This means that an individual who marries a qualified beneficiary other than the covered employee on or after the date of the qualifying event does not become a qualified beneficiary in his or her own right by reason of the marriage.

Likewise, a child born to or placed for adoption with a qualified beneficiary does not become a qualified beneficiary. New family members do not become qualified beneficiaries themselves, even if they become covered under the group health plan.⁷

A person whose status as a covered employee is attributable to a time when the person was a nonresident alien who received no earned income from the person’s employer that constituted income from sources within the United States is not a qualified beneficiary.⁸

An individual who does not elect COBRA continuation coverage ceases to be a qualified beneficiary at the end of the election period.⁹

There are situations in which a second qualifying event occurs. For example, an employee terminates employment and then subsequently divorces. In this situation, the maximum period of coverage for the employee remains 18 months and the maximum period for the impacted dependents remains 36 months. Notice must be provided to the plan administrator to obtain this extension.