With most organizations, it is easy to determine if a group plan is eligible for COBRA continuation. But some group plans might not be as obvious. First, it is important to understand the definition of a group plan. The IRS defines a group plan as “a plan maintained by an employer or employee organization to provide health care to individuals who have an employment-related connection to the employer or employee organization or to their families.” These individuals consist of employees, former employees and other associated or formerly associated with the employer or employee organization in a business relationship (including members of a union who are not current employees). Health care is provided under a plan whether provided directly or through insurance or reimbursement.
Group health plans must provide medical care (within the meaning of IRS Code, Section 213(d)). Medical care is defined as a diagnosis, cure, mitigation, treatment or prevention of disease and any other undertaking affecting any structure or function of the body. Lastly, the group health plan must be maintained by the employer.
Eligible Plans for COBRA Continuation
The following lists are plans you should be offering COBRA continuation.
- Health Insurance Plans, HMOs and Self-funded Health Plans;
- Dental Plans;
- Vision Plans;
- Indemnity type Cancer (or specific disease) Policies – plans that pay a dollar amount per incident and not an amount based upon actual claims;
- Prescription Drug Plans;
- Health Flexible Spending Arrangements (FSAs);
- Health Reimbursement Plans (HRAs);
- Executive Medical Reimbursement Self-funded Plans;
- Drug or Alcohol Treatment Programs;
- Wellness Plans; and
- Employee Assistance Plans.
The following is a review of “group” plans that are not eligible for COBRA continuation. (Remember, COBRA is a minimum requirement placed on employers. If they chose to offer continuation coverage on these plans, they can do so provided they have the approval of the insurer/provider.)
- Health Savings Account (HSAs) and Archer MSAs;
- Long-term Care Plans;
- Accidental Death and Dismemberment Plans (AD&D);
- Group Term Life Plans (with the exception of Minnesota where state law requires it);
- Short – and Long-term Disability Plans (STD & LTD);
- Hospital Indemnity Plans (where payments are not directly associated with the cost of services). For example, the plan pays $200 per day the person is in the hospital;
- Company Fitness Centers and On-site First Aid Facility; and
- Employee Discount Plans.