March Question of the Month: Do you send out a COBRA notice for a voluntary cancellation of coverage?

Do you send out a cobra notice for a voluntary cancellation of coverage?  Example:  an employee voluntarily moves to Medicare and drops group coverage, do you send a COBRA notice to the spouse for continuation with the employee’s group plan?

Great question, and the answer is not necessarily. For a voluntary termination of employment, yes, a COBRA notice is mailed. However, for a voluntary termination of benefits while continuing to be an active and eligible employee, no COBRA notice is mailed.

To receive a COBRA notice, two things must happen:

  1. A loss of coverage and
  2. A COBRA qualifying event must happen (7 possible events)

While a person is employed, if they voluntarily drop themselves or a dependent, no COBRA notice is mailed because while #1 is met, #2 is not met. An active employee (and tag-along covered dependents) can only experience 2 of the 7 COBRA qualifying events, Termination of Employment and Reduction of Hours. Since neither happened when they voluntarily dropped coverage then no notice is mailed.

Dropping coverage while still an active/eligible employee is exactly like an employee who decides to drop a spouse at open enrollment, you don’t send the spouse a COBRA notice in that case either.

I wrote an article on the topic of Medicare Entitlement which I suggest you read. I hope this answers your question.

– Gina



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