Termination of employment and COBRArights

[mal]

An employee became disabled in March, 2003. While

not entitled to Social Security disability, he can no

longer work as a pipefitter.

The Plan has extended health coverage at no cost

to the employee for the past 22 months. This ends

in March, 2005.

My question is whether this employee would have COBRA

election rights in March? He was never given an

election form in 2003, but the plan has covered him

longer than the 18 month continuation period.

Thanks for the input.

[Guest fritzreb]

My question is whether this employee would have COBRA

election rights in March? He was never given an

election form in 2003, but the plan has covered him

longer than the 18 month continuation period.

Yes, the employer must offer the employee COBRA coverage regardless of how long the employer paid his premium. Had the employer sent him a COBRA notice in 2003 and then agreed to pay his COBRA premium, their obligation would have ended after his COBRA coverage period ended. Since he was never sent a COBRA notification, they must do so now.

[KJohnson]

You may want to look at this from the regs

Q-7: If health coverage is provided to a qualified beneficiary after a qualifying event without regard to COBRA continuation coverage (for

example, as a result of state or local law, the Uniformed Services

Employment and Reemployment Rights Act of 1994 (38 U.S.C. 4315),

industry practice, a collective bargaining agreement, severance

agreement, or plan procedure), will such alternative coverage extend the

maximum coverage period?

A-7: (a) No. The end of the maximum coverage period is measured

solely as described in Q&A-4 and Q&A-6 of this section, which is

generally from the date of the qualifying event.

(b) If the alternative coverage does not satisfy all the

requirements for COBRA continuation coverage, or if the amount that the

group health plan requires to be paid for the alternative coverage is

greater than the amount required to be paid by similarly situated

nonCOBRA beneficiaries for the coverage that the qualified beneficiary

can elect to receive as COBRA continuation coverage, the plan covering

the qualified beneficiary immediately before the qualifying event must

offer the qualified beneficiary receiving the alternative coverage the

opportunity to elect COBRA continuation coverage. See Q&A-1 of Sec.

54.4980B-6.

© If an individual rejects COBRA continuation coverage in favor of

alternative coverage, then, at the expiration of the alternative

coverage period, the individual need not be offered a COBRA election.

However, if the individual receiving alternative coverage is a covered

employee and the spouse or a dependent child of the individual would

lose that alternative coverage as a result of a qualifying event (such

as the death of the covered employee), the spouse or dependent child

must be given an opportunity to elect to continue that alternative

coverage, with a maximum coverage period of 36 months measured from the

date of that qualifying event.

[jsb]

Was disability the result of a work related injury? If so, and depending on the state you're in, workers' comp laws may dictate how you would "normally" want to handle this type of situation.

Is the 2 year extension of benefits part of a union or other agreement, or has this person just "fallen through the cracks" for the past 2 years?

Based on the limited facts presented, offer COBRA as of the date coverage will be lost in March, 2005. If it is not the intent of your company to provide coverage for this length of time, review your policies and union agreements, and send COBRA offers when the reduction of hours occurs. However, you will need to be prepared to terminate coverage if someone does not positively respond to your offer of free coverage. As noted above, check your workers' comp laws if the reduction in hours is due to accepted industrial injury.

[mal]

The case is currently being litigated to determine

if the injury was work related. However, the Plan

will provide the 24 months of disability coverage no

matter whether the injury was work related or not.

Nice benefit huh?

[Kirk Maldonado]

Compared to the cost of actually litigating a case, the cost of providing those benefits for that period of time is negligible.

[jsb]

Mal,

Yes, very nice benefit. Very benevolent. What a wonderful employer! Sign me up...

I think (for the future) you could still set up the plan to trigger COBRA and satisfy the employer's obligation. But as noted by KJohnson, this should entail an election between COBRA and the "alternative coverage" of the disability plan paid health insurance benefits. If you are unionized, good luck with that take-away.