RE: COBRA - Should it be offered to a retiree at age 65?
Many take the position that in a plan where coverage ends at age 65 regardless
of Medicare entitlement, that termination of coverage is not a qualifying event
under COBRA. It is the age, not Medicare entitlement, that causes the loss of
coverage. Note that people generally are eligible for Medicare at age 65 but
only become "entitled to" Medicare after they apply and are approved.
However, you may have to offer COBRA to the retiree at age 65 depending on how
long it has been since the employee retired. Because your retiree coverage is
the same as and does not cost more than for active employees, it counts toward
the COBRA requirement triggered by the termination of employment (retirement).
Thus, if it has been more than the normal COBRA period (generally 18 months)
since retirement, you don't have to offer COBRA at age 65. If it has been less
than the retiree's COBRA period, you have to give the retiree 60 days from loss
of coverage to elect the remainder of their COBRA period.
If a retiree elects COBRA coverage for some period of time after age 65, as
discussed above, becoming entitled to Medicare after electing COBRA is a reason
to cut off COBRA coverage. If cut off, the retiree's beneficiaries have a
qualifying event and get a separate COBRA election right for up to 36 months
from the date of the retiree's retirement.
Miller & Martin LLP