Answers to tricky HR questions: OK to have a separate COBRA continuation plan?
August 15, 2008 by Jim GiulianoPosted in: Answers to tricky HR questions, In this week's e-newsletter, Latest News & Views, policies
Our team of experts fields real-life, everyday questions from HR managers and gives practical answers that can be applied by any HR pro in the same situation. Today’s question: Can we offer a separate COBRA plan to former employees?
Question:
The COBRA regs appear to say that any health insurance plan we offer to former employees should be a “continuation” of the plan they had while employed with us.
Does that mean for those eligible for COBRA we can’t designate a separate plan under a separate insurance carrier?
Answer:
You’re right that the regs mandate a continuation of the current plan, says Edward Fensholt, an employment-law attorney who specializes in COBRA compliance. But there’s another aspect to this.
The law was designed to make sure people get the same coverage as what they had when they were with the company. So if your “special” COBRA continuation plan contains lesser benefits than your regular plan, that’s a problem.
Bottom line: You can have two plans, but both plans should offer the same benefits.
Tags: benefits, COBRA, continuation, health insurance
October 20th, 2008 at 7:11 pm
We have decided to go with 2 health plan options this year instead of one. Neither is the plan we had before. We have also gone from a 90%/10% with no deductible to a 80%/20% with a higher copay and deductibles. Does this mean we have to continue to offer the previous plan to those who are already on COBRA? We haven’t changed carrier just the plan options.
January 19th, 2009 at 11:21 am
For Sue – You offer the same plan options to COBRA particiapnts as to the current employees.
March 10th, 2009 at 7:05 am
We have an HRA account where the employer pays $3200 towards the deductible and the employee pays $400 for a 2-person plan where the deductible is $4000. We had a layoff and 3 of the laidoff employees who are on the 2-person plan would like to go on cobra. How do we handle billing of the premium to include the $3200 or does the employer still have cover this amount?
March 11th, 2009 at 7:27 am
Does this only apply to employees that were terminated or does it also apply to employees that have retired but need coverage until Medicare A eligible?
March 13th, 2009 at 3:20 pm
We are in the midst of our renewal. Our present carrier has renewed reflecting a 50% increase. YES, 50%. They aledge that this is due to heavy usage by particulary 3 employees. Based on what I happen to think, I believe one possible two of these employees are on COBRA.
In an effort to be competitive, we are courting a different provider. We want to implement two plans, one for management and one for non management. We want to implement an hmo for management and a mini med for non management. Implementing the mini med would help us meet our compliance requirements (which we always struggle with).
Now for my question, if we were able to make this transistion, if the folks that are on COBRA are non managment, can we make an acception and allow them the choice between the two plans? In turn, can we also offer them only the mini med? This seems like a somewhat cruel due to their chronic circumstances but I pose it to you so as to understand the options we – the employer has.
Thank you,
Ely
July 16th, 2009 at 10:59 am
Jackie,
We have a similar plan and were told by the COBRA “expert” at our insurance company that we can include the pro-rata portion of the deductible in the premium. For example, if the monthly premium payment is $400 and the annual HRA contribution is $3200, the employee would pay $666.67 ($400 + 3200/12). In addition we are allowed by law to collect an additional 2% from COBRA recipients for administrative costs.