COBRA when only one co. is unionized?

[Guest LLandau]

Two organizations are in the same controlled group of companies. One company (A) will cease doing business. The other company (B) will continue operating.

Pursuant to regulation and case law, COBRA continuation coverage will be available to the terminated employees of B through A. Problem exists because employees of B are union employees but employees of A are not unionized.

How is this generally handled?

[oriecat]

Maybe I'm missing something, but I don't see what the problem is. Can you explain what problem you think that creates?

[KIP KRAUS]

I agree with oriecat. We need to know exactly what the problem is.

Is the union plan the same plan design as the non-union plan?

Are both plans insured through the same insurer under one contract?

Does the management of Company B have a non-union medical plan?

[Guest LLandau]

It is my understanding that the Co. A (closing) group health plan and the Co. B group health plan are through the same insurer under one contract, but the union plan (A) does not offer the same benefits as that of the non-union plan (B)?

From a review of case law it appears that, although I could not find anything on-point, the attitude is that COBRA coverage must be provided after a qualifying event even if the coverage is not be identical to the coverage lost.

Because of this "controlled group" situation (there is a "single employer"), I believe strong arguments may be made for offering COBRA through the remaining corporation because:

1) although A is closing its doors and all its employees will be terminated (there are no current "similarly situated employees"), the employees of B will be considered the similarly situated employees; and

2)COBRA does not guarantee the same coverage as that which was lost, only that of current similarly situated employees; and

3) Congress was primarily interested in not leaving employees unprotected and employers shoulder the burden of accomodating employees who sustain a qualifying event.

For these reasons I believe COBRA must be offered through the existing B plan and the B's plan does not require modification to accomodate the A employees.

Is my reasoning faulty?

Brutally honest opinions aren always welcome.

[oriecat]

If both types of benefits are under one contract though, why would the benefits change? Closing of the one business shouldn't cause the insurance contract to change, at least until renewal. I would think.