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COBRA and US employee living abraod


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A US based employer has an employee who is working abroad; the employee quits and is remaining in that foreign country to live.  

  1. What are our client's obligations in terms of offering coverage to this employee, considering their current international residence?
  2. Does the issuance of a COBRA rights letter in this scenario entail any legal or compliance risks for our client, given the employee's non-U.S. residency?
  3. Are there any specific steps our client should take to rectify this situation and ensure compliance with both U.S. and international regulations?

Thank you!

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Without the details on the actual coverage at issue here, I'm assuming this is some type of expat group health plan maintained by a U.S. company for the benefit of employees working abroad.  In that case, all the standard COBRA rights and obligations apply.  This will be handled in the same manner as a U.S. employee who experiences a COBRA qualifying event under the domestic GHP.

The only way you would avoid COBRA obligations would be if “such plan is maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens.”  For example, if the employee were covered under a plan primarily designed for residents/citizens of that foreign country to which the employee is assigned.  In that case, the plan would not be subject to ERISA/COBRA.  But based on the way you're approaching this, I doubt that's the situation here.

ERISA §4:
(b) The provisions of this title shall not apply to any employee benefit plan if—
(1) such plan is a governmental plan (as defined in section 3(32) [29 USC §1002(32)]);
(2) such plan is a church plan (as defined in section 3(33) [29 USC §1002(33)]) with respect to which no election has been made undersection 410(d) of the Internal Revenue Code of 1986 [26 USC §410(d)];
(3) such plan is maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws;
(4) such plan is maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; or
(5) such plan is an excess benefit plan (as defined in section 3(36) [29 USC §1002(36)]) and is unfunded.

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No, the employer offers a self funded medical plan through UHC.  The employee in question opted was allowed, by the supervisor, to move to the Netherlands last year and has worked remotely - and unbeknownst to HR was left on the UHC medical plan.  The employer is starting to call folks back into the office and this employee just quit. The employer sent him a termination letter and mentioned COBRA availability.  So the plan is a US plan.  

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