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COBRA - separate election for EAP

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#1 Benny Comply

Benny Comply

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Posted 08 February 2012 - 04:17 PM

Question regarding if EAP should be listed as a separate line of coverage for election of continuation coverage under COBRA:

EAP (which includes clinical visits) is offered to all active employees. Cost is combined with medical premium-equivalent rates, and employee pays a portion of the cost. (Employees who opt out of medical also have access to the EAP - the Employer just absorbs the cost.)

In practice, if a terminated employee elects COBRA continuation of medical coverage, EAP eligibility continues also.

Should we instead be permitting a separate election for EAP, such that a continuant may elect EAP without electing medical coverage?

#2 EE Bene

EE Bene

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Posted 21 December 2012 - 01:59 PM

To begin with, EAP services (standing alone) will constitute a group health plan under ERISA. This makes EAP subject to the COBRA requirement. Whether you have to give employees a separate COBRA election opportunity for EAP depends (largely) on whether EAP is a separate plan.

You indicate that employees who opt out of medical benefits still have access to EAP. That suggests EAP is a separate plan. Even if the employer treats EAP and medical as one plan, employees who are only receiving EAP will need an opportunity to enroll in EAP continuation benefits through COBRA.

A complicating factor here is how you calculate premiums. If EAP is a separate plan, you need a premium rate associated with that portion. Additionally, if EAP is a separate plan, you will have to give employees who opted in for medical coverage a chance to elect COBRA coverage only for medical, only for EAP, or for both.

The ultimate point is that the COBRA requirements apply to EAP. However, there are some business decisions that need to made moving forward in how best to structure this from the employer’s perspective. If you don’t want to calculate that EAP premium and offer a separate election, you will probably have to stop providing those benefits to employees who opt out of medical coverage.