COBRA and Plan Termination

[Guest JPotosky]

I need help on the following scenario. A government contractor has multiple healtplans some of which are tied to particular worksites (ie BCBS of Florida for pensacola, FL site). Assume that the employer loses the Pensacola contract and therefore terminates that plan. How does COBRA apply to the former employees under the contract? Is the employer required to make one of their other plans available to these Florida employees? Assume that all of the other plans are HMO based plans that do not provide in-network access in Florida.

What are the employer's requirements under COBRA? Assume the employer has significantly more than 20 employees.

[leevena]

Since the Pensacola plan is being terminated because the business is going away, then there would not be a requriement that they be offered COBRA.

[QDROphile]

Are the employees terminating or continuing employment?

[KJohnson]

I think as long as there is a group health plan anywhere in the controlled group that the COBRA obligaton still exists under the COBRA regs. I believe that's the legal answer. I am not sure what the practical answer is.

If you have an HMO plan in New York, how do you cover your Florida employees in that plan? Do you offer them coverage that is worthless and they have to go to NY for a doctor? Does it mean you have to keep a plan up in Florida? Do you have to modify your New York plan to cover Florida participants. I am not sure that these questions have been answered in anything I have seen.

I know when a COBRA beneficiary moves out of a coverage area you only have to provide them coverage if you would provide that coverage to a non-COBRA participant.

I believe that the regulations provide that the "type" of coverage you have to provide is that provided to similarly situated nonCOBRA beneficiaries which is ordinarily, the same coverage that the qualified beneficiary had on the day before the qualifying event). See Q&A-3 of Sec. 54.4980B-3 ....

If you aren't providing any Florida coverage to nonCOBRA beneficiaries, maybe the answer really is to give them the "worthless" COBRA coverage from the closest plan geographically.