COBRA question

[Guest Gibson]

Company A bought the stock of Company B in 1994. Pursuant to the stock purchase agreement, Company A agreed to pay for or provide similar medical benefits to Company B's terminating employees until such time as certain promissory notes executed in connection with the acquisition are paid in full by Company A. As a result, Smith, a former employee of Company B, has received medical benefits under Company A's group health plan since 1994. Smith has not performed services for Company A in any capacity. The promissory notes will be paid off soon. Company A needs to know whether it has COBRA obligations to Smith. Leaving aside whether Company A has an obligation to inform the insurer that it has covered an ineligible individual, does anyone have any thoughts on this issue?

[GBurns]

COBRA is required for ALL covered persons (with a few exceptions). If he was the dependent of am employee (such as a child) who reached the age limit, would you not have a COBRA event even though the child was never an employee?

Why do you say that he was "an ineligible individual"? Doesn't your plan cover former employees, such as retirees?

If he was really an inleligible individual, I would never mention it even on a board such as this. The fact that you knowingly allowed a party to make claims and collect benefits through a falsehood constitutes insurance fraud. The consequences can be horrible.