Who Is Covered by COBRA: Qualified Beneficiaries Explained
COBRA protects a defined group of people, called qualified beneficiaries, and the group is narrower than most employers assume.
Knowing exactly who is a qualified beneficiary tells you who must receive a notice and who may elect coverage. This guide walks through the definition in the tax code and its regulations.
The Definition of a Qualified Beneficiary
Coverage the day before the event is what counts.
The general rule. Under 26 U.S.C. 4980B(g)(1), a qualified beneficiary is the covered employee, spouse or dependent child who was covered under the plan on the day before the qualifying event.
Newborns and adoptions. A child born to or placed for adoption with the covered employee during the period of continuation coverage is also a qualified beneficiary under 26 CFR 54.4980B-3.
The employee. The covered employee is a qualified beneficiary only for a termination, a reduction in hours or the employer’s bankruptcy.
People Who Are Not Qualified Beneficiaries
Several groups are left out.
Later spouses. A spouse acquired after the qualifying event does not become a qualified beneficiary under 26 CFR 54.4980B-3.
Derivative coverage. A person covered only because of another person’s COBRA election is not a qualified beneficiary.
Those who decline. A person who does not elect COBRA stops being a qualified beneficiary when the election period ends.
Certain nonresident aliens. The statute excludes certain nonresident aliens with no U.S.-source earned income, along with their spouses and dependents.
Who Counts as a Covered Employee
Actual coverage matters more than eligibility.
Provided coverage. A covered employee is someone actually provided coverage, not merely eligible for it, with an exception where coverage was wrongly denied.
Contractors and directors. Self-employed individuals, independent contractors and corporate directors count as employees if their relationship with the employer makes them eligible for coverage.
Domestic partners. Whether a domestic partner is covered depends on the plan’s terms and state law. Check the plan document.
An Employee With a Spouse and a Child
The date of the qualifying event sets the list.
The facts. An employee is covered with her husband and one child. She is terminated, and months later remarries.
The result. The employee, her husband and the child are qualified beneficiaries. Her new spouse is not, because the marriage came after the qualifying event.
The takeaway. Build the notice list from the people covered the day before the event, not from the people in the family today.
Related Rules and Sources
Where to read the rule in full.
COBRA Continuation Coverage Law
Qualifying events and the rules in full.
The Notices
Who receives which notice.
How Long It Lasts
Each person’s coverage period.
26 U.S.C. 4980B, COBRA continuation coverage · 26 CFR 54.4980B-3, qualified beneficiaries · 26 CFR 54.4980B-2, plans that must comply
We run COBRA so nothing is missed.
We set up who administers COBRA, keep the notices on schedule and check the paperwork before it goes out.
Related pages.
State Continuation and Mini-COBRA
State laws for smaller employers.
How Long It Lasts
18, 29 and 36 months explained.
The Notices
The five COBRA notices.
What It Costs
What an employer may charge.
The 20-Employee Threshold
Counting to 20.
COBRA Continuation Coverage Law
The federal rules in full.
Questions that come up.
Short answers to the questions we hear most. Each links to the full page.
Who is a qualified beneficiary under COBRA?
The employee, spouse and dependent children covered the day before the qualifying event.
Is a new spouse a qualified beneficiary?
No. A spouse acquired after the qualifying event does not become a qualified beneficiary.
Are independent contractors covered by COBRA?
They can be, if their relationship with the employer makes them eligible for coverage under the plan.
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