COBRA and Leased Employees

[Chaz]

Company has a number of ex-employees on COBRA. Company wants to terminate all its group health plans. Contemporaneously with the termination of the Plans, the remaining employees will become "employed" by a leasing organization or PEO for payroll and health plan purposes. The remaining employees' jobs will essentially be the same.

Can the Company terminate the COBRA coverage for the ex-employees because the company no longer maintains a health plan for the benefit of any employees?

[Guest DRIVEN]

Who is the leasing company? Did they buy the existing company?

[GBurns]

Since the PEO will most likely not be the common law employer, How will the PEO be able to offer employee benefits?

Or will the PEO offer the Client the opportunity to jon a MEWA? If so, Has the state or DoL "approved" this MEWA?

I think that the IRS explained this issue in a Revenue Ruling issued in 2002. You might want to search these Forums for prior discussions and also search the "Who's the Employer?" Q&A Column.