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A Service of OnQue Technologies, Inc. |
| Must We Offer COBRA to a Former Employee Who
Moves Out of State? |
April 29, 2006
By Scott Haines, President
OnQue Technologies, Inc.
Santa Rosa, CA |
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The
following is an excerpt from Questions and Answers from the COBRA Help Desk–Part
III.
Employer: We offer 2 mutually exclusive
medical insurance plans. One is an HMO for in-state employees and the other is
a PPO for out-of-state employees. One of our in-state employees has left
employment, moved out of state and is seeking medical coverage under COBRA. Are
we able to change his enrollment from the HMO to the PPO under COBRA
coverage?
OnQue: You must present both the HMO
and the PPO continuation coverage options to the former
employee.
You must offer the HMO coverage because the IRS
final regulations require plan administrators to always notify qualified
beneficiaries of their continuation rights, even if the coverage is of no
apparent value to them. While that requirement may seem illogical on its face,
the final decision regarding the value of the coverage must be determined by
the qualified beneficiary, not by the employer or plan administrator. For
example, the former employee could decide to move back to the HMO service area
before his COBRA election period expires. Thus, you must deliver the
appropriate qualifying event notice and election form to the former
employee.
However, because the qualified beneficiary has
moved outside the HMO service area, you must also offer him the opportunity to
elect the alternative PPO coverage, provided such coverage is available to any
group of active employees and is extended to the qualified beneficiary's new
location. The IRS final regulations require employers to make the alternative
coverage available "…not later than the date of the qualified
beneficiary's relocation, or, if later, the first day of the month following
the month in which the qualified beneficiary requests the alternative
coverage".
Be aware that the regulations do not require you to
incur extraordinary costs under such circumstances, and you need not modify the
plan to make it more useful to the qualified beneficiary. |
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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