Social Security Disability, Medicare and COBRA

How does Social Security disability interact with both Medicare and COBRA. As you probably already know, Social Security disability, Medicare and COBRA proceed from complicated and highly technical statutes that interrelate in non-intuitive ways. Medicare is government health insurance for people who are insured under Title II of the Social Security Act. Medicare coverage is available to Social Security recipients age 65 and aboveand is available to disabled people who are found disabled and entitled to benefits under Title II of the Social Security Act. 42 U.S.C. § 426. For people under 65 who become disabled, Medicare benefits are availableafter a waiting period of 29 months from the date of the agencies' finding of the onset of disability or 24 months after entitlement to benefits. 42 U.S.C.A. § 426(f). Medicare startstwo years after a disabled person’s DENT (date of entitlement), which means Medicare coverage begins 2 years after the first month the person is due a Title II Social Security check – this date is determined once the person is found disabled.

COBRA, an acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985, intersects with both Social Security disability and Medicare in a number of ways, especially as it added ERISA Title I, Part 6, requiring that the sponsor of a group health plan make continuation coverage available to employees, spouses, ex-spouses, dependents, and others for certain periods following an event that might otherwise result in loss of coverage. COBRA does not require that an employer provide or offer health care coverage to its employees, but COBRA does mandate than any employer that does offer health care benefits must continue coverage in prescribed circumstances. Moreover, COBRA covers health care plans only and does not cover company provided disability plans or company sponsored life insurance plans. Additionally, coverage may not be conditioned upon evidence of insurability.

It is especially notable that under COBRA the employer is not required to provide coverage at the same cost as it was offered to the beneficiary while employed. Indeed, in most cases, the employer will require the beneficiary to pay the entire cost of the monthly premium and COBRA allows employers to charge 102% of the premium, the added 2% as a handling fee. Because of this cost shifting, beneficiaries are often shocked to find that the health benefits they received as an employee that were once free or provided at greatly reduced cost may now cost hundreds of dollars under COBRA.

In any case, COBRA is triggered by "qualifying events" that would otherwise result in loss of coverage. 29 U.S.C. § 1163. A qualifying event is a statutorily enumerated event that, with respect to any covered employee, but for the continuation of coverage required under this part, would result in the loss of coverage of a qualified beneficiary. The duration of COBRA coverage varies with the qualifying event but the most common duration is 18 months for a person who is terminated, or loses coverage due to a reduction in hours. 29 U.S.C. § 1162(2)(A)(i) and 29 U.S.C. § 1163(2). However, if a qualified beneficiary is terminated, the usual 18 months provided under 29 U.S.C. § 1162(2)(A)(i) may be extended to 29 months (for both the employee and any other qualified beneficiaries, such as a spouse or dependants) if a person is found disabled under Title II (Social Security Disability Insurance) or Title XVI (Supplemental Security Income). 29 U.S.C. § 1162(2)(A)(v). Beware though – in order to extend the coverage from 18 to 29 months, the person must 1) have been found to be disabled within the first 60 days of continuation of COBRA coverage, 2) must notify the plan administrator within 60 days of the date of determination by the Social Security Administration, and 3) must provide such notice before the end of the continued COBRA coverage. See, 29 U.S.C. § 1162(2)(A)(v), incorporating the 60 day-requirement of 29 U.S.C. § 1166(a)(3).

Coverage under COBRA ends at the conclusion of the duration periods set out in 29 U.S.C. § 1162(2)(A) (for some exceptions, see, e.g., 29 U.S.C. § 1162(2)(D)(ii)). Furthermore, if a person has extended COBRA coverage from 18 to 29 months on account of disability under the Social Security Act, and receives a “final determination" that he or she is no longer disabled, the COBRA ends at the beginning of the month that starts 30 days after the date of the SSA “final determination." 29 U.S.C. § 1162(2)(E). However, this is unlikely as a person would have to win her Social Security case, then have it reviewed, have it denied, and receive a “final decision" that her disability had ended, all in 29 months. Unless the person fails to appeal a cessation of benefits, the disabled person is entitled to continue drawing benefits until the case has been reviewed by an ALJ, so the chances of all that happening in 29 months are not very good.

In summary, it is important to understand how a decision with request to a claimant’s disability impacts both Medicare and COBRA. Initially,Medicare coverage is available topeople under the age of 65 who become disabledafter a waiting period of 29 months from the date of the agencies' finding of the onset of disability or 24 months after entitlement to benefits. Furthermore,if a claimant is found disabled by the Social Security Administration then he or she is entitled to an 11 month extension of COBRA benefits if certain notice provisions are met. Finally, if a claimant receives a “final determination" that he or she is not disabled, then COBRA ends at the beginning of the month that starts 30 days after the date of the SSA “final determination."