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I have not read this, but why would this law not be preempted by ERISA to the extent that it purports to regulate an employer whose plan is subject to ERISA?

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Someone might argue that ERISA doesn't preempt a State law to the extent that the law regulates insurance. ERISA 514(b)(2)(A). An employer that obligates itself under a group health insurance contract has some obligations under that contract. Along with this, a continuation provision might be an express or implied provision of the contract. Following this, some might argue that an employer could be included in "any person" that ERISA doesn't "exempt or relieve" from a State law that regulates insurance.

On the other hand, I wouldn't mind seeing an employer refuse to collect continuation premiums. I'd like to see how the litigation turns out.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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Without giving any thought or study to it, I agree with Peter. As a general matter, ERISA-regulated health plans that purchase group insurance coverage rather than fully self-insure are generally subject to state health insurance laws to the extent they regulate insurance provided under the group policy purchased for the plan. That is to say, ERISA generally does not preempt state insurance laws. I think that can carry over to other federal laws as well such as COBRA. I have, for instance, heard state insurance regulators note that their state continuation coverage laws generally apply to all employers who purchase state-regulated health insurance including large employers who are generally subject to COBRA. Interestingly, I have heard it asserted that when the state laws do not include gross misconduct exemptions it may be possible to argue that individuals who are terminated for gross misconduct and thus may be cut out of COBRA may nonetheless be entitled to continuation coverage under the state laws. In other words, COBRA would only preempt to the extent it is inconsistent with state law and in that case it wouldn't necessarily be inconsistent since the bad actor would only be entitled to one coverage option at the time (i.e., the state continuation coverage and not COBRA coverage). I have no idea whether that is right or not and have never seen it pushed or pursued. Like Peter, I would enjoy seeing the issue litigated as long as it didn't involve me.

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