Download Laws Related to Working Aged Beneficiaries

Laws Related to Working Aged Beneficiaries
Tax Equity and Fiscal Responsibility Act (TEFRA) – 1983
The TEFRA legislation, enacted on January 1, 1983, prohibits employers who employ 20 or more
employees from offering lesser health insurance benefits to employees and their spouses, ages 65
to 69, than those benefits offered to younger employees.
The law specifies 20 or more employees (not 20 or more employees enrolled in group health
coverage). The 20 or more employees threshold is met when an employer has 20 or more full or
part-time employees for each working day in 20 or more calendar weeks in the current calendar
year or the preceding calendar year. The 20 weeks do NOT have to be consecutive.
The intent of the law is to encourage beneficiaries to choose the GHP as the primary insurer.
This saves taxpayer (Medicare) dollars.
Key Points:

The employer must offer their insurance as primary.

The employee and/or spouse may choose Medicare as primary. If Medicare is chosen as
primary for the beneficiary, then the beneficiary must be dropped from the GHP and can have
no GHP coverage.

The beneficiary may select a supplemental policy; however, the employer CANNOT make
any payment for the policy.
Deficit Reduction Act (DEFRA) – 1985
The DEFRA legislation enacted on January 1, 1985, extended coverage by a GHP by eliminating
the age restriction for the employee. The employee, the working spouse of the beneficiary, can
be any age. The age restrictions for the spouse of the employee, the beneficiary, are the same as
the TEFRA legislation, age 65 through 69.
Key Points:

The spouse (beneficiary) has the same coverage choices as with the TEFRA legislation.

The “20 or more employees” is the same as TEFRA.

The intention of this legislation is to expand the number of beneficiaries covered by a GHP
based on the employment of the younger spouse.
Consolidated Omnibus Budget Reconciliation Act (COBRA) – 1986
The COBRA legislation, enacted on May 1, 1986, further extended coverage by a GHP by
eliminating the “over age 69” clause. An employer who employs “20 or more employees” is
prohibited from offering less health insurance benefits to employees and their spouses over age
69, than the benefits offered to younger employees.
Key Points:

The employee and spouse have the same coverage choices as in the TEFRA and DEFRA
legislation.

The “20 or more employees” threshold is the same as TEFRA and DEFRA.

The intention of this legislation is to expand the number of beneficiaries covered by a GHP
based on the employment of an older beneficiary or spouse.
Additional information on COBRA can also be found on the CMS Website at:
http://cms.hhs.gov/hipaa/hipaa1/cobra/default.asp