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Is this a Cobra Qualfiying Event?


Guest JD698

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A union health plan currently offers coverage to the employee with the option of coverage for employee +1 or employee and family. It varies among the different employers. One employer, as of January 1, 2004, will be only offering coverage to the employee and not to the spouse or any dependents. Is this a COBRA qualifying event for a spouse or any dependents currently covered by the plan?

If anyone can help, I'd appreciate it. Also, if anyone can point me towards any web site that has this information that would be great also.

THANKS!

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If I'm following your post correctly, yes, a loss in coverage would constitute a qualifying event in which the employer would need to offer the spouse and child(ren) COBRA. Just out of curiosity, why is the employer no longer offering dependent coverage? Why not continue to offer it while not contributing to it?

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I don't know why the employer is no longer covering dependents.

My next question is that although this is a loss of coverage, it is not due to death, divorce, change in employment status, entitlement to Medicare or bankruptcy. Would it still be considered a qualifying event?

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I disagree. There has been no qualifying event. Simply losing coverage is not a qualifying event by itself. The person has to experience one of the following events which then results in a loss of coverage: termination of employment; reduction in work hours; death of employee; divorce or legal separation; employee's entitlement to Medicare; dependent child reaches limiting age; or bankruptcy (for retirees). These individuals haven't experienced one of the qualifying events, so they don't have any COBRA rights.

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I agree with chloe. However, when you are dealing with a multiemployer plan (which it appears that you are) always check the regs. There are special rules with regard to withdrawals from multis (it is in the same section as the asset/stcok sale rules). Althouhgh I doubt they would dictate a different result from what chloe has indicated, you may want to double check.

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Guest BenefitsLawyer

My recollection from looking at these regs a couple of weeks ago is that the loss of coverage as a result of a cessation of contributions by the employer to the plan, in itself, is not a qualifying event. However, if the cessation of contributions is contemporaneous with another event (such as a reduction in hours or termination of employment) that would constitute a qualifying event, COBRA must be offered. But KJohnson is right--check the regs.

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Guest b2kates

I too agree with cloe and KJohnson.

simply loss of coverage does not trigger COBRA continuation rights. Employers are entitled to amend or terminate the plan without invoking COBRA.

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  • 2 weeks later...

I take back my previous response and agree with the others. For whatever reason I was thinking about qualifying events and being able to enroll in the spouse's plan after losing coverage even though that isn't even close to being what I typed!!

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  • 2 weeks later...
Guest Debster10028
However, if the cessation of contributions is contemporaneous with another event (such as a reduction in hours or termination of employment) that would constitute a qualifying event, COBRA must be offered.

Under HIPAA, this qualifies as an eligible reason for special late enrollment. If the spouse is employed and not in her employer's plan, she would be able to enroll offcycle (and not have to wait til Open Enrollment). Check the regs.

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As recently pointed out to me by a representative of the Department of Labor, the COBRA regs are only a "floor" and only describe the very minimum required. If the employer, plan administrator or COBRA administrator wants to make a loss of coverage due to cessation of contributions by the employer an event to allow COBRA, it can be done as long as that employer, etc., does it consistently.

In terms of employee relations, ceasing to cover dependents on short notice will not be favorably received and perhaps offering the option of COBRA coverage will help to mitigate any adverse reactions.

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Although Mary C's post is correct, it is important that sponsors of fully insured plans make sure that their insurer is willing to go above and beyond the requirements of COBRA. Otherwise, the employer runs the risk of being on the hook for services that are not covered by the insurance contract.

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Guest qualified plan

Also, along the lines of Steve 72's post, even self-insured plans need to be careful, as their stop-loss policy may only cover minimum COBRA coverage.

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