[Code of Federal Regulations] [Title 26, Volume 17] [Revised as of April 1, 2006] From the U.S. Government Printing Office via GPO Access [CITE: 26CFR54.4980B-0] [Page 280-282] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 54_PENSION EXCISE TAXES--Table of Contents Sec. 54.4980B-0 Table of contents. This section contains first a list of the section headings and then a list of the questions in each section in Sec. Sec. 54.4980B-1 through 54.4980B-10. List of Sections Sec. 54.4980B-1 COBRA in general. Sec. 54.4980B-2 Plans that must comply. Sec. 54.4980B-3 Qualified beneficiaries. Sec. 54.4980B-4 Qualifying events. Sec. 54.4980B-5 COBRA continuation coverage. Sec. 54.4980B-6 Electing COBRA continuation coverage. Sec. 54.4980B-7 Duration of COBRA continuation coverage. Sec. 54.4980B-8 Paying for COBRA continuation coverage. Sec. 54.4980B-9 Business reorganizations and employer withdrawals from multiemployer plans. Sec. 54.4980B-10 Interaction of FMLA and COBRA. List of Questions Sec. 54.4980B-1 COBRA in general. Q-1: What are the health care continuation coverage requirements contained in section 4980B of the Internal Revenue Code and in ERISA? Q-2: What standard applies for topics not addressed in Sec. Sec. 54.4980B-1 through 54.4980B-10? Sec. 54.4980B-2 Plans that must comply. Q-1: For purposes of section 4980B, what is a group health plan? [[Page 281]] Q-2: For purposes of section 4980B, what is the employer? Q-3: What is a multiemployer plan? Q-4: What group health plans are subject to COBRA? Q-5: What is a small-employer plan? Q-6: How is the number of group health plans that an employer or employee organization maintains determined? Q-7: What is the plan year? Q-8: How do the COBRA continuation coverage requirements apply to cafeteria plans and other flexible benefit arrangements? Q-9: What is the effect of a group health plan's failure to comply with the requirements of section 4980B(f)? Q-10: Who is liable for the excise tax if a group health plan fails to comply with the requirements of section 4980B(f)? Sec. 54.4980B-3 Qualified beneficiaries. Q-1: Who is a qualified beneficiary? Q-2: Who is an employee and who is a covered employee? Q-3: Who are the similarly situated nonCOBRA beneficiaries? Sec. 54.4980B-4 Qualifying events. Q-1: What is a qualifying event? Q-2: Are the facts surrounding a termination of employment (such as whether it was voluntary or involuntary) relevant in determining whether the termination of employment is a qualifying event? Sec. 54.4980B-5 COBRA continuation coverage. Q-1: What is COBRA continuation coverage? Q-2: What deductibles apply if COBRA continuation coverage is elected? Q-3: How do a plan's limits apply to COBRA continuation coverage? Q-4: Can a qualified beneficiary who elects COBRA continuation coverage ever change from the coverage received by that individual immediately before the qualifying event? Q-5: Aside from open enrollment periods, can a qualified beneficiary who has elected COBRA continuation coverage choose to cover individuals (such as newborn children, adopted children, or new spouses) who join the qualified beneficiary's family on or after the date of the qualifying event? 4.4980B-6 Electing COBRA continuation coverage. Q-1: What is the election period and how long must it last? Q-2: Is a covered employee or qualified beneficiary responsible for informing the plan administrator of the occurrence of a qualifying event? Q-3: During the election period and before the qualified beneficiary has made an election, must coverage be provided? Q-4: Is a waiver before the end of the election period effective to end a qualified beneficiary's election rights? Q-5: Can an employer or employee organization withhold money or other benefits owed to a qualified beneficiary until the qualified beneficiary either waives COBRA continuation coverage, elects and pays for such coverage, or allows the election period to expire? Q-6: Can each qualified beneficiary make an independent election under COBRA? 54.4980B-7 Duration of COBRA continuation coverage. Q-1: How long must COBRA continuation coverage be made available to a qualified beneficiary? Q-2: When may a plan terminate a qualified beneficiary's COBRA continuation coverage due to coverage under another group health plan? Q-3: When may a plan terminate a qualified beneficiary's COBRA continuation coverage due to the qualified beneficiary's entitlement to Medicare benefits? Q-4: When does the maximum coverage period end? Q-5: How does a qualified beneficiary become entitled to a disability extension? Q-6: Under what circumstances can the maximum coverage period be expanded? Q-7: If health coverage is provided to a qualified beneficiary after a qualifying event without regard to COBRA continuation coverage (for example, as a result of state or local law, the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. 4315), industry practice, a collective bargaining agreement, severance agreement, or plan procedure), will such alternative coverage extend the maximum coverage period? Q-8: Must a qualified beneficiary be given the right to enroll in a conversion health plan at the end of the maximum coverage period for COBRA continuation coverage? 54.4980B-8 Paying for COBRA continuation coverage. Q-1: Can a group health plan require payment for COBRA continuation coverage? Q-2: When is the applicable premium determined and when can a group health plan increase the amount it requires to be paid for COBRA continuation coverage? Q-3: Must a plan allow payment for COBRA continuation coverage to be made in monthly installments? Q-4: Is a plan required to allow a qualified beneficiary to choose to have the first payment for COBRA continuation coverage applied prospectively only? Q-5: What is timely payment for COBRA continuation coverage? 54.4980B-9 Business reorganizations and employer withdrawals from multiemployer plans. [[Page 282]] Q-1: For purposes of this section, what are a business reorganization, a stock sale, and an asset sale? Q-2: In the case of a stock sale, what are the selling group, the acquired organization, and the buying group? Q-3: In the case of an asset sale, what are the selling group and the buying group? Q-4: Who is an M&A qualified beneficiary? Q-5: In the case of a stock sale, is the sale a qualifying event with respect to a covered employee who is employed by the acquired organization before the sale and who continues to be employed by the acquired organization after the sale, or with respect to the spouse or dependent children of such a covered employee? Q-6: In the case of an asset sale, is the sale a qualifying event with respect to a covered employee whose employment immediately before the sale was associated with the purchased assets, or with respect to the spouse or dependent children of such a covered employee who are covered under a group health plan of the selling group immediately before the sale? Q-7: In a business reorganization, are the buying group and the selling group permitted to allocate by contract the responsibility to make COBRA continuation coverage available to M&A qualified beneficiaries? Q-8: Which group health plan has the obligation to make COBRA continuation coverage available to M&A qualified beneficiaries in a business reorganization? Q-9: Can the cessation of contributions by an employer to a multiemployer group health plan be a qualifying event? Q-10: If an employer stops contributing to a multiemployer group health plan, does the multiemployer plan have the obligation to make COBRA continuation coverage available to a qualified beneficiary who was receiving coverage under the multiemployer plan on the day before the cessation of contributions and who is, or whose qualifying event occurred in connection with, a covered employee whose last employment prior to the qualifying event was with the employer that has stopped contributing to the multiemployer plan? Sec. 54.4980B-10 Interaction of FMLA and COBRA. Q-1: In what circumstances does a qualifying event occur if an employee does not return from leave taken under FMLA? Q-2: If a qualifying event described in Q&A-1 of this section occurs, when does it occur, and how is the maximum coverage period measured? Q-3: If an employee fails to pay the employee portion of premiums for coverage under a group health plan during FMLA leave or declines coverage under a group health plan during FMLA leave, does this affect the determination of whether or when the employee has experienced a qualifying event? Q-4: Is the application of the rules in Q&A-1 through Q&A-3 of this section affected by a requirement of state or local law to provide a period of coverage longer than that required under FMLA? Q-5: May COBRA continuation coverage be conditioned upon reimbursement of the premiums paid by the employer for coverage under a group health plan during FMLA leave? [T.D. 8812, 64 FR 5173, Feb. 3, 1999, as amended by T.D. 8928, 66 FR 1848, Jan. 10, 2001]