COBRA - No Qualifying Event

[Guest Taxaholic]

Have a client who is moving from one state to another. The client is not leaving the employ but is just moving. Carrier got wind of the change, probably through change of address request, they are not licensed in the state client is moving to and say he must be removed from the plan.

Company wants to keep him on, but carrier says they can not. Understand that.

Well the company now wants to offer this employee COBRA and is asking if this type of situation warrants it. I have never seen this as a qualifying event, he still works for them.

I know that if an individual transfers within a single company but losses coverage that isn't a qualifying event. Seems like the same situation.

Any thoughts?

[Jacmo]

It should not matter that the carrier is not licensed in the state the employee is moving to. It seems to me that the contract between the carrier and the employer is bound by the rules of the state that the employer is headquartered in (where the contract was written).

Unless this is an HMO, and the carrier has no providers in the new state. The contract between the carrier and the employer should address this situation and spell out how it will be handled.

In the meantime, I would think if someone is losing coverage due to a geographic change, then that would trigger COBRA, except that "similarly situated full time employees" would no doubt be treated the same way, i.e., no coverage outside the agreed to geographic area.

[oriecat]

In the meantime, I would think if someone is losing coverage due to a geographic change, then that would trigger COBRA,

I have to disagree with this. The COBRA regs are very specific about what the qualifying events are, and this does not qualify.

I do agree with the beginning of your post though, and I really don't see how the carrier can just decide to term this person off. Is the person still working in the original state? Most of the insurance contracts I have seen require that the employee live OR work in the service area, and if this person will still be working there then they should still be eligible for coverage, imo.