Q. Our business recently was forced to implement layoffs—and most of our remaining employees walked off the job. All were given a COBRA notice, but only one chose to take the coverage. Since this was a group insurance policy and only one person will now be insured, the insurer is canceling our policy. What’s our responsibility to that ex-employee?
A. No federal COBRA continuation coverage is required when an employer no longer sponsors a group health plan. Therefore, when your group health insurance policy is terminated, your company may terminate the federal COBRA continuation coverage of all individuals receiving coverage.
However, if your company or a member of your company’s controlled group sponsors another group health plan, then all qualified beneficiaries must be offered COBRA continuation coverage under that plan.
Pennsylvania law allows termination of continuation coverage upon the termination of your company’s group health insurance policy. Additionally, Pennsylvania law requires group health insurance policies to allow covered employees and dependents, including those with continuation coverage, to convert to individual coverage without evidence of insurability upon termination of group health coverage. There are exceptions—for example, individuals eligible for Medicare or other group coverage or who have not been covered by the group policy for more than three months do not have to be given the right to convert to an individual policy.
Anyone whose coverage will end following termination of the group health insurance policy must receive notice of the termination and notice of any conversion or other rights available to that individual.