We have a retireed employee for whom we are bound by employment contract to purchase health coverage. He has been on COBRA at company expense with coverage through the self-funded plan and coverage will run out in Oct. Thoughts on whether we can put him on the self-funded plan with employer/employee co-share of funding? There are four more employment contracts to be honored.

Kathy Dupree

Not unless your self-insured plan document allows for this, otherwise they could apply for a conversion plan at the end of their Cobra coverage.

You can always amend your own self-insured plan to expand coverage. Two potential issues, however:

1. Will this retiree's claims be counted towards your stop-loss coverage?

2. Any 105(h) problem with this?

If the retiree was an HCE, this may mess up nondiscrimination testing.

Employment contract? If the individual is retired, they are not employed. How can the company be bound to provider medical coverage if the individual is no longer working? If you are offering retiree medical, than you need to expand your definition of eligibility and the terms to be eligible for retiree medical (such as age and years of service). You will than have an official legacy issue with your accounting department to determine long term cost to provider retiree coverage and if and when these individual loose coverage and if and when they can add or drop coverage. You also have to decide if you have one or two SPDS active and or retiree plan. Whatever happened to retirement packages? Such as giving a person a lump sum payment of 2 weeks (example only) of pay for every year they worked or something like that in which they could apply towards paying their cobra or other employer insurance premiums. You need a lawyer to get you out of this

We finished this deal off with an attorney and it was sticky. Accruals have already been booked. Thanks for sharing the misery. -kad