COBRA and Dropping Health Insurance

Ranger

One of our employees has ownership in another business. His question is if this other company decides to stop offering health insurance, do they have to offer COBRA. Isn't this is an ERISA question? Thanks in advance.

Betty I_O

The law grants an exemption from COBRA to the District of Columbia, Federal employees, certain church-related organizations, and firms employing fewer than 20 people. (The IRS has said that employers must figure part-time workers into their employee total to determine if they can claim exemption.) If your employee works for a company that has fewer than 20 employees, he/she may not be eligible for COBRA under the Federal statute. But . . . individual states have enacted their own "mini-COBRA" laws that, in many instances, grant broader rights in determining eligibility. Even if your employee works for a small company that is exempt from Federal law, he/she might not be completely out of luck. Check the state statutes for COBRA laws in your state.

Nat

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If the company is not offering health insurance, I don't think they can offer COBRA because there is no insurance. They might consider offering some lump sum of cash for the employee to purchase their own. More and more companies are not being able to afford insurance for their employees and are having to drop coverage. I would definitely check with legal for advice on how to do this.

njjel

In NJ for instance, has health continuation insurance which is available through the employee's health insurance carrier for up to 12 months. So depending on your state laws your employee may be eligible for insurance. Good luck to him.

NaeNae55

If the employer CEASES TO MAINTAIN ANY GROUP HEALTH PLAN then COBRA need not be offered. If there is still some type of group health plan being offered by the company, then the company must continue to offer COBRA.

Hope this helps. Good luck!