Election changes for new COBRA participants

[Guest jduns01]

Assume a plan offers more than one coverage option (example, HDHP and traditional PPO) and allows active employees who have a change in status under 125 to change their elected coverage consistent with the change in status. Assume further that the plan provides that a significant change in the cost of coverage is a recognized change in status and that the employer subsidizes premiums for the plan for active employees but not for COBRA beneficiaries.

When an employee has a COBRA qualifying event, does he need to be offered the ability to elect cobra coverage under either of the coverage options (and not just the option that he was in).

The 125 rules aren't really applicable because the premiums are all paid with after-tax money by former employees (or non-employee dependents / former spouses). But, since an active employee whose premium cost more than doubled would have a status change that would enable an election change, I think that the "identical to the coverage provided under the plan to similarly situated beneficiaries" requires the offering of both coverage options.

What do you think?

Posting under a new name but still me -- Jduns

[Sandra Pearce]

The 125 regulations regarding significant cost or coverage changes apply when the person is a particpant in the 125 Plan. Termination of employment would end participation in the 125 Plan.

COBRA continuation is offered for the option the QB is enrolled as a participant in on the day prior to the Qualifying Event.