COBRA? What the...

Mar 24, 2008

  1. TonyC
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    TonyC Guru

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    Pardon the question from a Newbie...

    Lets say and employer fires an employee....Who pays for the COBRA insurance after he's been terminated

    ....The employee or employer?
     
    TonyC, Mar 24, 2008
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  2. LGilmore
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    LGilmore Guru

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    It can depend, but technically Cobra is paid by the "former" employee.
    Depending on the cause of the termination, Cobra coverage can be denied as well.

    In some cases where there is a parting of the ways... an employer can agree to pay towards cobra premiums for some period of time. But usually if the word "Fired" is in the vocab... the ex-employee will pay.
     
    LGilmore, Mar 24, 2008
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  3. Dave020
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    Dave020 Super Moderator Moderator

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    Employer is never responsible to pay anything for continuation coverage (COBRA or mini-COBRA). Theoretically, an employer could pay the beneficiary or the beneficiary's premium or some part of it. It would be taxable income to the beneficiary.

    Insurance carriers and TPAs frown upon this practice.
     
    Dave020, Mar 24, 2008
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  4. LGilmore
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    LGilmore Guru

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    "an employer could pay the beneficiary or the beneficiary's premium or some part of it"

    Done often where there is a friendly "parting of the ways". In fact, my brother was just given this (employer pays cobra) as part of a severance package. It doesn't even have to be plused out as salary.
     
    LGilmore, Mar 24, 2008
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  5. Dave020
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    Dave020 Super Moderator Moderator

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    That must have been a very amicable parting of the ways. Wow, he must be well-liked by the former employer.

    One thing to note here though (not that is applies to your specific situation), but one must always remember that in the world of employee benefits, once a standard is set it MUST apply across the board.
     
    Dave020, Mar 25, 2008
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  6. LGilmore
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    "One thing to note here though (not that is applies to your specific situation), but one must always remember that in the world of employee benefits, once a standard is set it MUST apply across the board."

    True, but.... an ex-employee is no longer an employee, subject to erisa guidelines. For an active employee or employees, you are spot on, if the employer wants to take the tax deduction. There are situations where an employer can discriminate, the question becomes is it tax deductible and/or does the employer want to maintain control?
     
    LGilmore, Mar 25, 2008
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  7. TonyC
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    I was at a meeting yesterday...and apparently the limit is 20. After that, the employer must kick it part of Cobra...

    Anyone hear of this?
     
    TonyC, Mar 26, 2008
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  8. arnguy
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    Huh? COBRA does not impact an employer unless they have 20 or more employees. Employers with less than 20 employees are not subject to COBRA. It has been that way since COBRA was enacted. The employer never has to contribute anything to the COBRA coverage. The COBRA coverage must be exactly the same as the group health coverage that was extant at the employee had the event that triggered COBRA. The cost to the employee for the COBRA coverage is the amount the employer pays for the group health coverage; however, in addition to the actual cost of the group coverage the employer may add a surcharge capped at 2% above the cost of coverage. If that has changed, please enlighten me by citing the legislation that brought about the change you mentioned.
     
    arnguy, Mar 26, 2008
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  9. LGilmore
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    ow. read up guys...

    Cobra applies to the number of employees working (not necessarily insured by) a an employer for a given day. There is more detail but I don't want to copy and post.. just take a googgle look.

    A group of 5 can offer cobra benefits. The employer is in no way responsible to pay any portion of the cobra premium. Not all insurance products are subject to cobra either. A plan may bundle or un bundle all cobra benefits (med, vision, dental) and charge a small handling fee.

    Tony C you would greatly improve your stature at these meetings if you could correct some of the misinformation flowing free..Before anybody acts on it.
     
    LGilmore, Mar 26, 2008
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  10. Dave020
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    Dave020 Super Moderator Moderator

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    I don't think that this is correct. A group not subject to either a state mini-COBRA or federal COBRA requirement would not be allowed by the insurance carrier to continue coverage on non-active (off payroll) employees. This would seriously skew that risk of the group. The only way this could be done would be to list the beneficiary as still active employee which would constitute insurance fraud. I believe a group under 20 would only be allowed to offer continuation coverage if approved by the health insurance carrier (excepting, of course, mini-COBRA).

    Now, onto the basics since there is some confusion.....

    1 - groups with 20 or more employees for at least 1/2 or the previous calendar year are required to offer continuation under federal COBRA. The counting for employees includes both full-time employees (30+ hours per week) and part-time employees counted fractionally (i.e., 3 10-hour per week employees constitute 1 30-hour per week employee and count as 1 employee)

    The federal government does NOT recognize any group under 20 employees, period. Any group under 20 employees may fall under a state law, but is not subject to federal COBRA laws. In addition, 20+ person groups are required to be primary insurance with Medicare as secondary. Under 20, Medicare is primary and private group is secondary.

    2 - Groups under 20 employees are exempt from federal COBRA laws and are not required to offer COBRA continuation. Many states have enacted mini-COBRA programs that mirror federal COBRA for groups under 20. Each state determines the minimum group size. Most states are 2-19 however Ohio is 10-19 and does not recognize, even on a state level, groups 2-9 for continuation purposes.

    There are some states that have no mini-COBRA programs available, some are 2-3 months, others 36 months. Nevada has it, but not if you quit your job, only if you are fired.
     
    Dave020, Mar 26, 2008
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