Under what circumstances will retired employees and their families become qualified beneficiaries?

• A. Only if they are receiving retirement benefits.
• B. Only if the employer files for bankruptcy.
• C. If the employer files for certain types of bankruptcy.
• D. Only if the employee dies.

Answer: (C)

The situation hinges on how COBRA handles coverage when the sponsor of a group health plan runs into financial distress. Retired employees and their families become qualified beneficiaries when the employer files for bankruptcy under certain chapters, because that bankruptcy can affect the plan’s continuation and trigger COBRA rights for those retirees. This is a special rule beyond the usual events like loss of employment or reduction in hours, and it specifically addresses the impact of the employer’s bankruptcy on the availability of continued coverage for retirees and their dependents. The other options don’t fit because simply receiving retirement benefits isn’t a qualifying event for COBRA, and not all bankruptcies trigger COBRA rights—only certain types that affect the plan.