Trust for COBRA Premiums

[Christine Roberts]

Does anyone have experience administering a trust (VEBA or taxable) designed to hold COBRA premiums with respect to an unfunded, self-insured group health plan?

Is it necessary that trust assets be directly used to pay claims experienced by COBRA recipients (qualified beneficiaries) or is it sufficient that trust assets replenish employer general assets used to pay claims experienced by COBRA recipients (or active participants)?

Is the answer any different in instances where the employer heavily subsidizes COBRA premiums?

Any comments appreciated.

[J Simmons]

Does anyone have experience administering a trust (VEBA or taxable) designed to hold COBRA premiums with respect to an unfunded, self-insured group health plan?

No experience, but seeing that no one else has yet posted a reply and you indicate any responses are welcome...

Is it necessary that trust assets be directly used to pay claims experienced by COBRA recipients (qualified beneficiaries)...?

Such a segregation from other plan assets should not be required. So I would answer your question, no. COBRA does not require the employer to maintain a separate plan, but rather to allow those losing coverage under the employer's group health plan in certain instances to continue the coverage under that group health plan. In fact, if the employer stops its group health plan altogether, the employer may also stop elected COBRA coverage early.

...is it sufficient that trust assets replenish employer general assets used to pay claims experienced by COBRA recipients (or active participants)?

Should be.