Link to full text of final COBRA regulations issued 2/3/99

[Dave Baker]

The long-proposed COBRA regulations have gone final. IRS issued

them today. Hypertext version is online at

http://www.benefitslink.com/taxregs/54.4980B-final.shtml (click)

An overview, from the preamble to the new final regs:

The regulations are intended to provide clear, administrable

rules regarding COBRA continuation coverage. The regulations

give comprehensive guidance on many questions under COBRA,

with a view to enhancing the certainty and reliance available

to all parties -- including employees, qualified

beneficiaries, employers, employee organizations, and group

health plans -- in determining their COBRA rights and

obligations. The guidance is designed to further the

protective purposes of COBRA without undue administrative

burdens or costs on employers, employee organizations, or

group health plans.

For example, the regulations:

* Prevent group health plans from terminating COBRA

continuation coverage on the basis of other coverage that a

qualified beneficiary had prior to electing COBRA

continuation coverage, in accordance with the Supreme Court's

decision in Geissal v. Moore Medical Corp.

* Give employers and employee organizations significant

flexibility in determining, for purposes of COBRA, the number

of group health plans they maintain. This will reduce burdens

on employers and employee organizations by permitting them to

structure their group health plans in an efficient and cost-

effective manner and to satisfy their COBRA obligations based

upon that structure.

* Provide baseline rules for determining the COBRA

liabilities of buyers and sellers of corporate stock and

corporate assets and permit buyers and sellers to reallocate

and carry out those liabilities by agreement. This will

significantly enhance employers' ability to negotiate and to

plan appropriately for the treatment of qualified

beneficiaries in connection with mergers and acquisitions,

while protecting the rights of qualified beneficiaries

affected by the transactions.

* Limit the application of COBRA for most health flexible

spending arrangements. This will ensure that COBRA

continuation coverage under health flexible spending

arrangements is available in appropriate cases without

requiring continuation coverage where that would not serve

the statutory purposes.

* Eliminate the requirement that group health plans offer

qualified beneficiaries the option to elect only core

(health) coverage under a group health plan that otherwise

provides both core and noncore (vision and dental) coverage.

* Give employers, in determining whether the small-employer

plan exception applies, the option of counting by pay period

rather than by every business day, and provide, for that

exception, for the consistent treatment of part-time

employees through the use of full-time equivalents.

This topic is "closed," which means that messages cannot be added to it, because it is only intended to provide an anchor to the full text of the final regulations; to post a message about the final regulations please click on "Start a new topic" below.

[This message has been edited by Dave Baker (edited 02-03-99).]