COBRA qualifying event..

[Guest ebailey]

If we change our eligiblity requirements for a self-funded health plan to be from "normally works 24 hours" to normally works "32" hours - is that a qualifying event for COBRA for the employees who lose coverage as they no longer have the requiste number of hours? I don't see how it is but want to be sure. DOes anyone see an issue with this assuming this doesn't discriminate in favor of the HCEs.

thanks

[jpod]

This is the United States of America, so anyone can sue anyone else for almost any reason, and judges often do crazy things, but with that said I believe a correct reading of the law is that a loss of coverage due to a change in eligibility requirements is not a COBRA qualifying event.

Assuming 105(h) is satisfied, I don't see any other problems.

[Guest Sieve]

jpod --

I'm not so sure that this is not a qualifying event. What about this language:

"If a group health plan measures eligibility for the coverage of employees by the number of hours worked in a given time period, such as a preceding month or quarter, and an employee covered under the plan fails to work the minimum number of hours during that time period, the failure to work the minimum number of required hours is a reduction of hours of that covered employee's employment." (Treas. Reg. Section 54.4980B-4, Q&A-1(e).)

[J Simmons]

This is the United States of America, so anyone can sue anyone else for almost any reason, and judges often do crazy things, ...

As Borat might say, "What a country!"

BTW, jpod, when I began reading your post, I first thought of Otter's speech near the end of Animal House, before the Greek Council on whether Delta House's charter would be revoked, and you were going to finish up with "I will not stand here while you bad mouth the United States of America!"

[jpod]

Sieve: I think the sentence you quoted is merely an illustration of the basic principle of "reduction of hours," which is stated in the first sentence of paragraph (e). The loss of coverage here is due to a change in eligibility requirements (i.e., from "normally . . . 24 hours" to "normally . . . 32 hours"). And, I didn't say that I couldn't make an argument with a straight face in favor of COBRA eligibility, I just said that I thought the correct interpretation is that there was no COBRA.

I have a moral/ethical dilemma with the proposal, however. It's one thing to tell a new employee who is seeking a job that he/she will not get health coverage. It's another thing to tell somebody who has had coverage that starting X date you're getting kicked out and will have to find coverge elsewhere.

[Guest ebailey]

To help with the moral issues - we have a 32hr requirement - need to cut hours overall but want to keep as many people on health care as possible - so we're going to reduce the hour requirement in the plan to 24. That reduction will include some now part-time people who were excluded before. However, we plan on putting the hour requirement back up at the end of the year - which will then re-exclude the part-time people who had access to health care (2 part-time people) for these 7 months. So for these 2 people will they get COBRA when the hour requirement goes back up? From the above discussion - I think not.

thanks