Terminating the Employment Relationship

C. C OBRA N OTIFICATION The federal Comprehensive Omnibus Budget Reconciliation Act of 1985 (“COBRA”) 406 requires employers that sponsor group health plans with 20 or more employees, to notify their employees of the optional availability of continuation coverage under the employer’s health insurance plan because of the occurrence of a listed “qualifying event”, such as termination. The plan administrator, who is usually also the employer, must notify the beneficiary of his or her rights under COBRA within 14 days of receiving notice that a qualifying event has occurred. 407 In the event the employer is not the plan administrator, the employer has 30 days to notify the plan administrator that a qualifying event has occurred, and the plan administrator then has 14 days from the date of notification to notify the employee.

COBRA permits statutory penalties against the plan administrator for failure to comply with the notice requirements. 408 Consequently, the most important post-separation obligation with respect to COBRA is to issue a letter notifying an employee of his or her eligibility or denial.

LCW Practice Advisor

As a general matter, if an employee only has access to a plan, but has not elected coverage under the plan – i.e., employee had the opportunity to have medical coverage, but did not take advantage of the opportunity – he/she is not considered a "covered employee" for purposes of COBRA. 409 1. C AL -COBRA Cal-COBRA is a California law that is similar to COBRA. Cal-COBRA applies to employers and group health plans that cover two to 19 employees. It allows employees to maintain insurance for up to a total of 36 months after a qualifying event, such as termination. 2. Q UALIFYING E VENTS There are several qualifying events that trigger an employer’s obligation to issue a COBRA notice. For purposes of this workbook, termination is included in the list of qualifying events. However, as discussed below, termination for gross misconduct can disqualify an employee. The following is a non-exhaustive list of “qualifying events”:

Death of an employee (notification to covered dependents);

End of employment relationship causing a discontinuation in benefits (notification to ex-employee and covered dependents); Reduction in an employee’s hours making him/her ineligible for the employer’s health plan (notification to employee and covered dependents);

Employee divorce (notification sent to spouse);

Terminating the Employment Relationship ©2019 (s) Liebert Cassidy Whitmore 128