IRS issues guidance on relationship between COBRA and Family and Medical Leave Act

Article Abstract:

The IRS has issued some guidance on the interplay between the Family and Medical Leave Act and post-employment medical insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The guidelines state that the qualifying event triggering COBRA coverage would occur on the last day of the leave and the COBRA coverage period begins on that day. If the employee does not return to work at that point, termination results and COBRA is triggered. At the end of the leave, the employee's health coverage is required to be the same as at the beginning of the leave, so the employee need not pay for coverage during the leave.

Family leave

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Resignation with notice not a COBRA qualifying event

Article Abstract:

The US Court of Appeals for the Seventh Circuit ruled in Mlsna v. Unitel Communications, Inc. that a qualifying event occurred when employment actually terminated and not when notice was given under Consolidated Omnibus Budget Reconciliation Act (COBRA) post-employment health insurance rules. The Court found that, as long as no gross employee misconduct occurred, Unitel had the obligation to notify the employee and his wife of their right to COBRA coverage. The Court dismissed arguments that the employee should have known these rights and remanded the case back to the trial court.

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Health plan portability legislation that would substantially change COBRA introduced

Article Abstract:

A bill has been introduced in the US House of Representatives that would improve the portability of health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The bill would limit the ability to deny coverage for preexisting conditions and prohibit certain restrictions based on health status. The bill would allow COBRA beneficiaries to opt for lower-value health insurance and would deny termination of COBRA for people who become eligible for Medicare because of end-stage renal disease. Divorce qualifying event rules will also be changed.

United States

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