We have a large employer group that has union and non-union employees. If an employee switches jobs within this employer group that causes him to lose coverage under the non-union plan and he is not eligible to enroll in the union plan until he completes the waiting period, is his loss of coverage under the non-union plan a qualifying event? He is not terminating employment, nor is there a reduction in his work hours. There is no sale involved either. He just chose to move to a job that is under the union.

Thanks for your help!

I can't recall anything in the statute or the regs. that would make this a qualifying event. Similarly, a loss of coverage resulting from an employer's decision to end coverage for a particular group of employees is not a qualifying event.

The employee is moving to a class that is no longer eligible for the benefit plan he is in. The change in employment status is triggering a loss of coverage. Offer COBRA.

jsb: What is your authority for the proposition that this is a qualifying event? If it's not, the employer can offer whatever it wants, but don't you think the insurance company may have something to say about that?

Perhaps one of the list's legal eagles can provide an appropriate reg. cite or case on point. I cannot. But I think it turns on the interpretation of either "termination" of employment or reduction in hours.

As an administrative interpretation, I would consider the employee to have terminated covered employment when accepting the union job and offered COBRA on that basis. As an alternative, you could consider the employee to have a reduction of hours in the covered postion to 0.

I believe that it would not be prudent to fail to offer COBRA in this instance. Much better to agree beforehand with your carriers that this type of situation, though uncommon, will be covered rather than to end up in court over a large bucket of unpaid claims due to a serious accident or illness that occured during the waiting period between when corp coverage stops and the union coverage begins.

"Big bad corporation takes advantage of poor helpless worker" ... no thank you.

Really? Has it been verified that the other time of employment does not already constitute the "waiting period"? I suppose the union would not want that disincentive to join the bargaining class of employees; is it covered in the CBA?

I'd like to revive this topic --

Can anyone provide a reference to support this situation being a qualified event?

What about in the case of an employee who transfers from one collectively bargained location for which both medical and dental benefits are offered to another collectively bargained location for which only a different medical plan is offered (no dental plan)? Should the employer offer COBRA for the dental benefits?

Any thoughts are much appreciated.

There are two issues with the transfer within a company and depending on the situation COBRA may or may not be available.

If an Employee transfers "voluntarily" to a position that does not have a group plan (non-union to union as example) available to him/her, there is no qualifying event, and obviously no COBRA coverage is available.

If an Employee is transferred by the Employer as a way for the Employer to avoid COBRA, then it is a qualifying event and COBRA is available.

Hope this helps.

Leevana: What is your authority for your statement? There are 2 employment related QEs: termination of employment and reduction in hours.

Yes, you are correct that there are two QE's; term of employment and reduction in hours. Since neither has occured, and assuming that the employer did not inititate the transfer as a way to avoid COBRA, there is no QE.

As for authority, don't know how to prove something like this, sorry. There is nothing in the regs/law that explain every possible situation.

There is no definitive guidance on this but the regs define "employer" as being all entities in the 404 "controlled group," etc. The logical interpretation that follows is that a transfer within the controlled group is NOT a termination of employment and not a QE even if it resulted in a loss of coverage.

That being said, I would hesitate in advising a client not to offer continuation coverage in such a circumstance if for no other reason that the possibility of a claim along the lines of what leevena raises. The insurer would have to consulted on this, however.

And how would you propose to offer cobra if (a) the employee is no longer a member of the covered group under the insurance, and (b) coverage is available under the insurance to someone who is not in the covered group only to the extent necessary to comply with cobra?

It's just a matter of balancing the risks.

I am a little confused by the discussion and why some believe that COBRA should be offered. Am I missing something?

COBRA qualifying events for the employee are quite simple and clear; 1) Termination from employement and 2) reduction in hours, thus making the person ineligible for benefits. Neither of these two events has occured.

As I said, I am somewhat confused, so please help us with an explanation.