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Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), group health plans sponsored by employers that employ an average of 20 or more employees are required to offer continuation coverage in specific circumstances. While the requirements imposed by COBRA are varied and complex, one of the most important issues for employer-sponsors to understand is what triggers the right to continuation coverage. One of these triggers, known as qualifying events, must occur in order for an individual to have rights to continued coverage under the health plan.
As part of its employee benefits offering, an employer may choose to extend coverage under its group health plan to the domestic partners of employees. An employer may make this decision to more effectively recruit and retain talent, or it may do so based on society’s evolving views of marriage and relationships. Regardless of the motivation, employers that decide to offer coverage to domestic partners face several important compliance issues, including design-based considerations and taxation requirements.
Employers are often looking for ways to manage rising health care costs. One common approach they may consider is offering an opt-out arrangement to their employees. In such an arrangement, an employer offers a financial incentive or an opt-out payment to employees who waive employer-sponsored group health coverage. Employers may implement an optout arrangement with the idea that the cost of the opt-out payment will be less than cost of covering the employee on the group health plan. If an employer is considering an opt-out arrangement as a plan design, they should be aware of the various compliance issues and laws affecting these arrangements.