Are individuals entitled to Medicare eligible for COBRA coverage?
If an individual is on COBRA coverage and becomes entitled to Medicare after the date of COBRA election, then COBRA coverage can clearly be terminated. However, the question arises as to the individual who is entitled to Medicare before the date of the qualifying event. According to the IRS COBRA Proposed Regulations issued in 1987, an individual entitled to Medicare benefits does not fit the definition of a qualified beneficiary and is therefore not entitled to COBRA coverage. In the only court case on this issue, however, the Supreme Court for the State of South Dakota ruled an individual was still entitled to COBRA even though they were on Medicare. This clearly goes against the IRS COBRA Proposed Regulations. While this court ruling is a state ruling and therefore not binding on parties outside of South Dakota, your legal counsel needs to give you a ruling on how strong this case may impact your COBRA administration.
