COBRA and Dependent Audits

[Christine Oliver]

Hello -

My understanding is that if an employer finds ineligible dependents enrolled in health insurance plans as a result of an audit, the employer is not obligated to offer COBRA to those that are removed from coverage. Can the employer choose to extend COBRA to these folks or is that not permissible or creates other compliance issues.

 

[Peter Gulia]

If the health plan is “self-funded”, an employer that offers more than the plan (including applicable law) provides does so at the employer’s financial risk.

A stop-loss insurance contract typically responds only to claims that not only are beyond the attachment point but also are within the plan’s coverage, typically limiting continuation coverage to no more than applicable law commands.

This is not advice to anyone.