COBRA Q&A Series 1: QBs & New Employer Plans

Posted on November 13, 2007. Filed under: COBRA & Health Insurance |

This is the first in an ongoing series of posts which I’ll add to over time as we receive interesting COBRA compliance administration questions from our customers and industry friends.  We’re unique in the US healthcare benefits administration industry in that before we built a technology and services company to serve this industry we first built and ran one of the nation’s largest third-party COBRA administrators for over 2500 employer clients.  In other words, we’ve walked a mile or so in our customers’ shoes, and our systems and services are “built by administrators for administrators.”  As a result, we regularly receive questions about how we would handle a given scenario.

In each post I’ll share the question we received and our answer.  I hope to create something of a “knowledge base” over time with these posts and may create a dedicated page to index them.  Please always keep in mind when reading these that I am not an attorney, and I am not providing legal advice.  If you have a legal question concerning COBRA, HIPAA, USERRAFMLA, or any other ERISA matter, you should consult an attorney who specializes in these areas of law.  Finally, if you’d like a basic overview of COBRA with some links on where to find more official information, please see my earlier post here.

Question

If an employer is offering a new voluntary benefit plan to its employees (i.e. offering a voluntary vision plan for 2008 when the employer has not previously offered a vision plan), does the employer have to extend this new voluntary benefit plan to COBRA participants, too? This new benefit is not linked to or part of the medical plan in any way. It is simply a new benefit to employees. Since the COBRA participants did not have vision coverage on the day before their qualifying events, we don’t think we should have to offer vision to the COBRA participants, but we’re having trouble confirming this in the regs.

Answer

You are correct that the COBRA regs provide a COBRA Qualified Beneficiary (“QB”) the opportunity to elect to continue coverage under the plan(s) they held on the day before their COBRA Qualifying Event.  In other words, if an employer offered both major medical and dental plans for 2007, and an employee was only enrolled in the major medical plan, when the employee becomes a COBRA QB he/she would not have the option to enroll in dental at that time.  A QB can only initially elect to continue those plans he/she held prior to the qualifying event.

However, the COBRA regs also state that a QB must be treated the same as a “similarly situated active employee.”  The regs also state that they apply to any group health benefit sponsored by the employer (so whether or not the plan is voluntary doesn’t change whether or not COBRA applies).  During annual open enrollment, if your active employees are given the option to enroll in new/different plans, then, if we were administering COBRA for you, we would offer this same option to your COBRA QBs.  We would ask you to send the same open enrollment information to your COBRA QBs which you provide to your active employees and allow them to select from the same benefit plan options.  So, in this specific case, yes, we would offer the COBRA QBs the right to enroll in this new vision plan for 2008 if they so choose.

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  • About

    Mark Waterstraat

    VP Sales

    Benaissance

    www.benaissance.com

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