Most of your employees understand that if they lose their jobs, they have options available that will allow them to continue their health care benefits. But if an employee faces a long-term disabling injury or illness and must stop working, the options may be less clear. There are critical time limitations when it comes to maintaining their health care coverage—especially when applying for Social Security Disability benefits.  

What your employees may not know is that if they must leave work due to a permanent disability, there is a five-month waiting period before Social Security Disability (SSDI) benefits begin and 24-months of SSDI benefits received, before Medicare kicks-in. With the maximum limit of 18-months of COBRA coverage, this leaves a potential 11-month gap in their healthcare coverage.

Filling in the Gap

With the COBRA Disability Extension provision, a disabled employee who is currently receiving COBRA benefits can continue their COBRA coverage up to an additional 11 months once the initial 18-month period is over, filling the gap between benefit periods. However timing is everything when it comes to coordinating benefits.

At-a-glance, employees are eligible for the COBRA Disability extension benefit when all of the following are true:

• They apply for SSDI and are awarded benefits during the first 18-months of COBRA. Employees must apply early to allow time for Social Security to process, approve, and distribute the award letter. Important tip! If employees are initially denied, they can appeal. However, if the appeal and final approval doesn’t occur until the COBRA ends, they would be ineligible for the extension.
• The disability onset date determined by Social Security is within 60-days of the employment termination date or reduction in hours that caused the loss of health care coverage which originally triggered COBRA. This can be anytime during the first 60-days they are on COBRA. Important tip!  The 60-days are counted as calendar days, not business days.  
• The employee provides the plan administrator with a copy of the Notice Award letter from Social Security, notifying them that the employee now qualifies to continue on COBRA coverage for an additional 11-month time period. The award letter must be provided to the administrator within 60-days of the date on the Social Security Award letter.  Important tip! Failure to provide the award letter as outlined will cause the employee to be ineligible for the 11-month COBRA Disability Extension.

If you are an employer, your COBRA administrator becomes a valuable resource for your business when it comes to understanding the complexity and timeliness of coordinating employee health benefits with other federal resources.  

If you’re an employer looking for additional information on coordinating health care benefits with the COBRA Disability Extension and COBRA eligibility guidelines, visit the US Department of Labor’s Health Benefits Advisor for Employers.

If you haven’t outsourced your COBRA administration yet, now is the time to assess if it would be a good decision for you. With the added challenge of PPACA compliance, most HR teams welcome the relief of outsourcing COBRA administration. To further explore the option, download our free report – “In Search of ROO (Return on Outsourcing).”