On-Site Clinics and COBRA

[KimberlyC]

I have an employer that employs select employees to work in medical and laboratory settings  ( small percentage of the employee population).  The employer provides vaccinations, TB testing, vision screening, initial health screening, blood pressure checks, first aid for work-related injury and illness evaluation, treatment, and case management, research lab exposure emergency access and follow up; and  blood and airborne pathogen exposure valuations. Many of these "health plan" services provided on-site are required under OSHA.  The services are not provided to other employees who don't work in the medical and lab settings. Although the services go beyond the limited on-site exception for ERISA, we can take care of documents and Form 500 reporting.  I also am fairly  comfortable that the services are either preventive or not significant for HSA participation for any of these employees in the HDHP. 

The critical issue is COBRA. The services go beyond the limited on-site clinic exception for COBRA. By law, the employer cannot provide these services to non-employees. COBRA doesn't specify where services will be performed  so for other employers who offer vaccines and limited tests, we offer COBRA and send employees to a drug store.  However, in the current situation there are multiple services and referrals to a outside providers would be difficult and expensive.   

The employees are required to have the services to perform their jobs and many are required by law.  From a policy standpoint this makes no sense to require COBRA for health services required for a job when the employees are no longer employed.

Any thoughts?  Hopefully the agencies will one carve out limited  on-site programs. 

[Brian Gilmore]

My only thought is to agree with your policy position.  But I don't see how you avoid COBRA obligations given it's outside the first-aid exception.

From a policy standpoint, there should be an exception for where the services provided at the on-site clinic are required for employees by law. 

We have an ERISA exemption for disability plans required by state law (i.e., statutory state disability requirements) under ERISA §4(b)(3) that could be extended in the same way:

(b) The provisions of this title shall not apply to any employee benefit plan if—

(1) such plan is a governmental plan (as defined in section 3(32);

(2) such plan is a church plan (as defined in section 3(33)  with respect to which no election has been made under section 410(d) of the Internal Revenue Code of 1986;

(3) such plan is maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws;

(4) such plan is maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; or

(5) such plan is an excess benefit plan (as defined in section 3(36) and is unfunded.

[KimberlyC]

Thank you!  the problem is the COBRA and ERISA exceptions were drafted so long ago. The law is far behind what is happening with U.S. employers. In this case, it would be illegal for the employer to provide on-site services to former employees. They did exempt more robust on-site clinics from the ACA and could extend that exception to COBRA and ERISA by regulation.

[jmkstl]

I would go ahead and price the COBRA and offer those other services - if it is as expensive and complicated as it appears to be, no one is actually going to elect the COBRA.   Carve these services out of the general medical plan (as you have apparently done) and let former employees choose, or not, the coverage.   

If that is untenable, as you note, the rules are pretty old and there is no enforcement activity around them.  Since the services seem to be for testing and the like, failure to offer them is likely to be a small risk.  The larger risk is the penalty for not offering COBRA at all.

[KimberlyC]

Thank you, the biggest area of exposure for not offering COBRA are the penalties associated with not providing notice.

Another issue is that the on-site provider is charging a fairly small fee - $275 per participant for on-site services regardless of use. If we used that amount as the premium, the CORBRA cost would not that expensive.  Other services are very difficult to replicate if someone elected COBRA - treatment for exposure to chemicals in a lab.