Are all employees on group medical plans who are fired entitled to COBRA?
No. Although it is common for employers who offer group medical benefits to assume that employees are entitled to continuation of benefits under the federal Consolidated Omnibus Budget Reconciliation Act, which is a horrible name for a law but has a nice acronym in COBRA, that is not always the case.
First, COBRA is only required of employers with 20 or more employees, either full-time or part-time, who worked at least 50% of the business days in the previous calendar year. That requirement exempts a lot of small businesses.
Second, COBRA benefits are only triggered when there is a qualifying event that results in the employee losing coverage of her group medical benefits. This assumes that the employee was on the group medical plan on the day before coverage was lost. Qualifying events for employees occur under either of the following circumstances: (1) termination of the employee's employment for any reason other than gross misconduct; or (2) a reduction in the number of hours of employment.
As (1) above notes, you can deny continuation benefits under COBRA to an otherwise eligible employee if she was terminated for gross misconduct. Unfortunately, the regulations do not define what is meant by this term leaving us to figure it out. It is easier to say what gross misconduct is likely not. It is likely not a performance related termination. It is also likely not a misconduct termination for a non-offensive, non-threatening or non-serious infraction such as an attendance violation, or lying about taking sick days. Situations such as serious harassment in violation of an anti-discrimination or anti-harassment policy, theft, and physical conduct beyond horseplay are more likely to be gross misconduct sufficient to meet this COBRA exception. Each situation should be examined by itself though and employers should generally be cautious and conservative when denying this benefit for otherwise eligible employees.
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