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A Service of OnQue Technologies, Inc. |
| Is Voluntary Coverage Subject to
COBRA? |
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.
Broker: Is it true that voluntary health
coverage is subject to COBRA?
OnQue: A voluntary plan is not subject to
COBRA if the employer meets the Department of Labor (DOL) safe harbor
requirements, which are:
- The plan must be completely
voluntary, with no employer contributions;
- The employer may not endorse the
plan in any manner; and,
- The employer's involvement must be strictly limited
to: a) permitting the insurer to promote or publicize the plan directly to
employees; b) collecting premiums through payroll deductions; and, c) remitting
the premium payments to the insurer.
These requirements appear to be straightforward;
compliance should be easy to maintain and easy to prove when challenged.
However, there is a catch in the language—a word that gives attorneys
something to argue about: endorse. Is a manager's recommendation to an employee
deemed a company endorsement of the plan? Maybe, maybe not. The answer depends
on many factors, including who is making the call. And those calls are
generally made by attorneys, who argue about it, and federal judges, who make
the final decision. If that decision goes against the employer, the dollars fed
the litigation machinery will likely be trivial when compared to the cost of
paying the family's medical bills.
Employers are sometimes free to sidestep this issue
completely by including voluntary plans in their COBRA offering. I imagine that
the administrative burden would be minor compared to the task of ensuring
compliance with the DOL safe harbor requirements, particularly in light of the
endorsement issue. However, many employers have no choice, because their
insurers prohibit continuation of voluntary plans by requiring them to meet the
safe harbor requirements. |
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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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