Another COBRA question

Leslie · August 2003

My boyfriend is opening his own business. His last day with his present company is August 31. The present company is selling to a large corporation which will be final in September. HR told him that he will only receive COBRA for a month because of the sale. I know this can't be true, but what does happen in this instance?

Pearce · August 2003

There are specific COBRA regulations related to Mergers and Aquisitions. It is highly likely that the purchasing company will have the obligation of picking up the ex-employee as a COBRA participant in their health plan.

Dixie Lee · October 2003

I subscribe to a COBRA "handbook" if you will from an Institute (don't know if I am allowed to advertise on this site) and from whom I receive updates quarterly. There is a lot of reading, but can make reference to any of the questions I have seen here today. It provides samples to use etc. If I am allowed to mention the place I order it from, I will be happy to share. It has been a great resource for me over the past 11 years.

NaeNae55 · August 2003

Pearce is right. The company obligated to deal with COBRA is supposed to be determined during the purchase process. Usually the purchaser ends up with it, but not always. It is possible this HR person has not seen the agreement, or has not been in a merger or aquisition before. I would go back to them with this information and ask them to check the agreement.

Good luck!

Leslie · August 2003

Thanks folks. At least I have a starting point now, because I had no clue.

njjel · August 2003

I'm thinking however that if the larger company DROPS the old insurance and continues with their policy, then those on COBRA would NOT have coverage. Any thoughts on this angle?

Leslie · August 2003

I've thought of this, because I believe that to be the case - the present plan is going to go away and the plan of the purchasing company will take it's place.

The smaller company is obligated to COBRA because they are still in existance and have a plan. I THINK they have to offer COBRA under the new plan.

Anybody else out there have some knowledge to share????

Ethel · November 2003

When we went through a similiar situation, the purchasing company was going to accept/assume our COBRA obligations. This was part of the sale agreement. I am not 100% sure if under law they have to do this if it is not part of the sales agreement.

Another COBRA question

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