Sixth Circuit Finds No Qualifying Event Under COBRA

The Sixth Circuit recently ruled that altering an employee’s contribution method to a group health plan does not by itself change the terms and conditions of plan coverage and, thus, was not a qualifying event to trigger notice under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).

During an employee’s leave of absence due to a work-related injury, her employer began deducting health insurance contributions from her workers’ compensation payments rather than through payroll deductions. After the workers’ comp benefits terminated, she didn’t return to work and was unable to pay her premiums, which lead to the termination of her health insurance.

She sued her employer for failure to send her a notice of continued coverage under COBRA after the occurrence of the qualifying event. The employee argued a “qualifying event” under COBRA had occurred when her hours were reduced accompanied by the change in payment method of premiums.

The Court found no qualifying event had occurred. To be considered a “qualifying event” under COBRA, an employee must have experienced a reduction of hours leading to a loss in insurance coverage. When her employer began deducting premiums from her workers’ compensation checks, it did not inherently change the “terms and conditions” of coverage and therefore was not a qualifying event. Instead, it was the employee’s failure to pay premiums, not the change in payment methods, that resulted in the loss of coverage.

Employers with group health plans subject to COBRA should be aware of the various events that trigger specific COBRA notices, when such notices must be sent, and to whom. For more information on these compliance obligations, check out ComplianceDashboard.

The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice.