Can domestic partner coverage continue under COBRA?

If you offer employees the option of healthcare coverage for domestic partners you are not alone. More than 35% percent of US private employers including 52% percent of Fortune 500 companies allow their workers to choose healthcare benefits that cover domestic partners.

While plans have increasingly included domestic partner eligibility there is no federal requirement to offer continuation of benefits when coverage ends. COBRA legislation mandates that employers offer plan options to covered employees, their spouses and covered dependent children when a qualifying event occurs. Qualifying events include termination of employment, loss coverage due to a change in status, death of the employee and divorce.

Employers may choose to offer the option of continuing domestic partner benefits. Check with the benefits provider before you do, they don’t have to extend coverage that is not required by COBRA. As with any other benefit decision it’s important to be consistent. Don’t decide to extend the option to one laid off manager and not another.

Domestic partners are not eligible for the 65% federal subsidy included as part of this year’s economic stimulus package. The ARRA subsidy is only available to federally eligible COBRA participants, former employees their spouse and dependent children. So if you offer continuation of domestic partner benefits you will have to figure out an entirely different premium rate, or multiple rates based upon the choices made by the terminated or laid off employee.

Add this complication to the list of reasons to outsource COBRA administration!