Company Termination of COBRA

jkb · May 2003

Our company is changing names, and Tax ID# on the 1st of July, 2003, total new corporation. The current employees will continue with the new company at the same pay scale. At the present time we have 15 past employees on COBRA due to downsizing in January 2003. We are a small company with only 35 employees, 25 are currently insured, (our insurance company is changing also). QUESTION: What type of COBRA termination notice do we give the COBRA insured and how much time is required when giving notice? This is happening very fast, I have only had a week notice myself. We are located in Utah.

I appreciate any help you can give me, thanks in advance.

Judy
HR Manager

System · May 2003

Judy, I believe that once an ee is placed on COBRA, they are paying the insurance premium(s) directly to the insurance company and you are out of the loop.

Are you self-administering any of the COBRA benefits - like dental? You need to notify those ee's by certied mail, that will be affected by the present company's demise and the discontinuation of existing plans and advise them of their recourse. You will need to check with your present carrier and see what recourse you and the ee have with regard to tranferring the ee's coverage to that carrier for completion of the COBRA time.

Now, this poses a question - your company is totally going out of business - right? Everything will be terminated? Then according to the Federal Employment Law under COBRA, an employer can legally terminate a qualified beneficiary's COBRA coverage IF all health plans are terminated. If a covered employer no longer provides group health coverage to any of its employees, it is not obligated to provide continuation coverage. This is sort of a catch 22, if you have an attorney, check with him/her for clarification.

SandiF · May 2003

[font size="1" color="#FF0000"]LAST EDITED ON 05-12-03 AT 11:39AM (CST)[/font][p]I agree with Winebarger's second paragraph,however, employees on COBRA send their premiums directly to their former employer, not to the insuance company.
I am not aware of insurance companies collecting premiums. Does this ever happen?

I meant the third paragraph!

System · May 2003

Sandi, actually yes. When our ee's are placed on COBRA, they deal directly with the health insurance company, not us. I guess it is just a matter of how things are set up by each corporation/agency. Dental premiums, we do carry for the COBRA timeframe. Our dental carrier did offer to carry the coverage, but there was a significant charge to do so, so we do self-administer that benefit. What does everyone else out there do?

Pearce · May 2003

I would carefully read, and possible consult with a attorney versed in benefits, the final COBRA regulations regarding business reorganizations. Although the tax ID number is changing and your insurance carrier is changing, the company is apparently still going on under another name and with the same employees. The COBRA obligations are employer obligations and not insurer obligations and it is unlikely that the current insurance carrier is going to continue the COBRA coverage for the former employees. Without doing any research I would say that your company will need to provide COBRA continuation for the former employees.

Company Termination of COBRA

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