COBRA at a 34-Person Firm, an Aging-Out Dependent, and a New Spouse

Yes - 18 months, at up to 102% of the full premium.

• Wellington has 34 employees, so it is a covered employer under federal COBRA (20+ employees in the prior calendar year). The plan is fully insured and presumably not a church or governmental plan.
• Resignation is a qualifying event for the employee and covered dependents: 18 months of continuation (30 months for a dependent's loss of dependent status; 36 months for death, divorce, or Medicare entitlement of the covered employee).
• Charging limit: the firm's 70% contribution stops. Dana may be charged up to 102% of the applicable premium (the group rate plus a 2% administrative fee).
• Procedural deadlines: the employer must notify the plan within 30 days; the plan then has 14 days to notify Dana, who has 60 days to elect. Her first payment is due within 45 days after election, and coverage is retroactive to the qualifying event once paid.
• Coverage ends early for nonpayment, if the firm terminates the group plan entirely, or when she becomes entitled to Medicare.
• Practical advice: given the subsidy ineligibility, price the full COBRA premium against a marketplace plan before she elects.

The son gets his own 36-month COBRA election; Dana's COBRA premiums are after-tax.

Aging out:

• Losing dependent status because he reaches the plan's limiting age is a qualifying event for the dependent himself. He is a qualified beneficiary entitled to 36 months of continuation, measured from the date coverage would otherwise end.
• He gets his own 60-day election period and his own 45-day payment window, and he may elect even if Dana declines.
• Coverage generally ends at the end of the month in which he turns 26 (check the plan document). His loss of coverage also gives him a special enrollment period to buy an individual/marketplace plan.

Tax treatment:

• While Dana was employed, the firm's 70% was excludable from her income, and her 30% was pre-tax through the §125 cafeteria plan (also reducing FICA).
• On COBRA she pays with after-tax dollars: the cafeteria plan is available only to current employees, and the employer contribution has ceased. She cannot use an FSA or HSA to pay COBRA premiums unless she has her own HSA-eligible coverage and the HSA rules are met.
• If the firm voluntarily subsidized COBRA, the subsidy would generally still be excludable as employer-provided coverage.

Yes - marriage is a HIPAA special enrollment event, but the clock is 30 days.

• Omar must request enrollment within 30 days after the June 1 marriage (measured from the date of the event, not from when he learns of the rule).
• If he requests timely, coverage for the spouse must be effective no later than the first day of the month following the request - the plan may make it effective earlier but cannot delay beyond that.
• No preexisting-condition exclusion or late-enrollment penalty may be imposed on a special enrollee; the spouse is treated as having enrolled when first eligible.
• If he misses the 30 days, the special enrollment right is gone and he must wait for open enrollment (November) with a January 1 effective date - or use her own employer's plan or a marketplace special enrollment period triggered by the marriage.
• Other special enrollment events worth naming: birth, adoption or placement for adoption, and loss of other coverage (which requires the request within 30 days of the loss).
• Documentation: the plan should require a marriage certificate but cannot demand evidence of insurability.