Handling Cessation Of Dependency Status

The cessation of dependency status is a COBRA event that permits the ex-dependent to continue his or her health plan coverage under COBRA for up to 36 months.

To do so, the Plan Administrator must be given notice of the occurrence of a dependent ceasing to meet dependency status under the plan.

This notification should be given to the Plan Administrator by the later of: (1) 60 days after the date on which the dependent would lose dependency status under the plan; (2) 60 days after the date the dependent would lose coverage under the plan; or, (3) the date the QB receives the general COBRA notice or SPD containing the general COBRA notice information.

COBRA allows group health plans to establish reasonable procedures for QBs to furnish notice of a dependent ceasing to be a dependent under the plan.

Such procedures are deemed to be reasonable if the procedures: (1) are described in the Summary Plan Description; (2) specify the individual or entity designated to receive such notice; (3) specify the manner in which notice should be given; (4) describe the qualifying event and the information that the plan requires to provide COBRA coverage; and (5) provide a minimum of 60 days for notice of loss of dependency status from the later of:

The date of the loss of dependent status
The qualifying event
The date the QB loses coverage
The date the QB receives the General COBRA Notice or SPD containing the General COBRA Notice information

The basis for accepting or rejecting a notice should be included as part of the notice procedures. The plan may require QBs to utilize a specific form designed by the plan as long as the form is easily available at no cost to the QB.

A covered employee, QB, or representative acting on behalf of the covered employee or QB may provide notice of a dependent ceasing to qualify for dependency status under the plan.

A Plan Administrator may not treat a notice as untimely if the notice does not contain all of the information requested under the plan's procedures, but is received within the 60-day time frame and the Plan Administrator is able to determine from the notice the identity of the covered employee and QBs, the qualifying event is loss of dependency status, and the date on which the loss of dependency status occurred.

However, if the notice does not contain the information required by the plan, the plan may require additional information from the employee/QB. If the information is not provided within a "reasonable period of time", the plan may reject the employee's notice, meaning the employee may be denied COBRA continuation coverage.

If the plan has not established reasonable procedures, employees and QBs may provide written or oral notification identifying a specific event that will reasonably bring the information to the attention of the person or organizational unit that customarily handles employee benefits.

Administratively, there are several concerns in administering Cessation of Dependency Status issues that must be defined in advance. These include:

When is the child no longer a dependent?
How do you communicate your definition of cessation of dependency status?
How do you receive notification of cessation?

Group health plans that provide dependent coverage must provide coverage for adult children until they attain age 26, regardless of tax dependent status.

Dependent coverage must be available to age 26 and cannot be conditioned on student status, residency, financial support or marital status. The adult child's spouse or children do not have to be covered.

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