COBRA and Sale of Assets

[Guest Hedwig]

The buyer is the successor employer and hired all of seller employees except two who will be working for buyer as independent contractors. Buyer is assuming COBRA obligation (buyer has a health plan, seller does not). Buyer's plan excludes independent contractors. Under 54.4980B-9 Q&A 6, an asset sale is a qualifying event with respect to covered employees unless the buyer is a successor employer (it is) and the employee is "employed by the buying group." Are the independent contractors treated as "employed by the buying group" thus there is no qualifying event or must they be offered COBRA?

Thanks for any help.

[oriecat]

I'm confused. If the seller doesn't have a health plan, then those 2 employees wouldn't be covered now, and therefore would have no loss of coverage, right? If there is no coverage to loss, what coverage would they continue through COBRA?

[Guest Hedwig]

Sorry - The seller HAD a health plan until the asset sale at which time their plan was terminated.