COBRA M&A question.

[KJohnson]

In an asset deal seller terminates its plans. All employees are hired by a successor employer. However, successor employer has a 3 month waiting period for new hires. Are these employees M&A beneficiaries? It seems under the proposed regs that they may be left without coverage and with no COBRA rights for these 3 months.

[Linda]

I agree with your interptation of the regs. The employees (associated with the sold assets) who do not get a job with the buyer are entitled to COBRA from the buyer -- but the employees hired by the buyer are not entitled to COBRA. Still, though not required under the COBRA regs., you would think the buyer would want to credit past service toward the waiting period just to keep its new employees happy.