<i>Dear Workforce</i> What Do We Need to Know About COBRA When Someone Is Fired for Misconduct

May 4, 2010
Dear Searching in Vain:
The answer depends on the type of misconduct that precipitates an employee's termination. A person who is terminated from employment due to gross misconduct is not eligible for COBRA in the first place. Whether the conduct amounts to “gross” requires a case-by-case analysis. Someone who is eligible for COBRA and is terminated due to misconduct—but not gross misconduct—may receive the subsidy if he or she meets the eligibility requirements (e.g., termination and loss of coverage within the proper time window).
Here are two Q&As from Treasury Notice 2009-27 that provide additional details:
Q: Does involuntary termination include involuntary termination for cause?
A: Yes. However, for purposes of federal COBRA, if the termination of employment is due to gross misconduct of the employee, the termination is not a qualifying event, and the employee and other family members losing health coverage by reason of the employee's termination of employment are not eligible for COBRA continuation coverage.
Q. Who qualifies as an assistance-eligible individual?
A. An individual must be an assistance-eligible individual to [receive] the premium reduction. Under the American Recovery and Reinvestment Act of 2009, an assistance-eligible individual is a qualified beneficiary as the result of an involuntary termination that occurred between September 1, 2008, and March 31, 2010, is eligible for COBRA continuation coverage at any time during that period, and elects the COBRA continuation coverage. To be a qualified beneficiary, the individual must be covered under the group health plan on the day before the involuntary termination (except in the case of a child born to or adopted by a covered employee during a period of COBRA continuation coverage, or in certain circumstances where coverage was wrongfully denied the individual).
Under federal COBRA, an individual who loses group health coverage in connection with the termination of a covered employee's employment by reason of the employee's gross misconduct is not a qualified beneficiary, and thus cannot be an assistance-eligible individual.
SOURCE: Joanne L. Hustead, The Segal Co., Washington, April 8, 2010
LEARN MORE: Read how the stimulus bill changes some provisions in COBRA coverage.
Workforce Management Online, May 2010 -- Register Now!
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
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