Once a year we pay for our employees' annual physical. If an employee terminates, do we have to offer him COBRA for this? If so, can we charge as the premium 102% of the full cost of the physical or do we have to figure out how much it would cost in premiums to buy insurance for the physical and charge 102% of that amount? I posted this previously but there was no response and I wanted to try again.

OK, I'll take a stab at my question and see if I can get any input.

It seems to me that, yes, this is a group health plan subject to COBRA.

It also seems to me that two ways to determine the applicable premium is to find out how much extra per eligible employee it would cost to add this benefit to the employer's insurance policy, or find out how much it would cost per eligible employee to obtain insurance coverage for the annual physical, and charge that cost (plus 2%) to the qualified beneficiary. I don't think the employer should charge the qualified beneficiary 102% of the cost of the physical itself.

Any thoughts?

I think it might depend upon how the physicals are currently being paid for. Do you reimburse employees for their copay or coinsurance amounts? Do you have one free physical built into the insurance contract? Do you have someone come on site and all ees can get a free physical then?

The physical is not built into an insurance contract. The employer either pays the physician directly or the employee brings in the bill and gets reimbursed. The employer pays the entire amount; the employee pays nothing. No one comes on site. Each employee picks his or her own doctor and his or her own appointment.