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Re: COBRA DISCONTINUANCE UPON ASSET SALE

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Posted by Fred on January 08, 2010 at 12:45:32:

In Reply to: COBRA DISCONTINUANCE UPON ASSET SALE posted by mark on March 03, 2009 at 14:19:46:

Mark

Sadly it's a tactic that will work. Trying to convince the gov of an owners motivation, is a difficult thing. Companies do things to avoid liability often. Some legal, and ethical, some legal but unethical. You could complain to the secretary of labor or the IRS, and make them aware of the company dumping the health insurance, but it would be more of a personal "crusade."

If the plan ends, there is nothing to continue. COBRA would not apply. If the buyer had a health care plan, that would be dif.

Federal regulations provide little guidance on the impact of a company sale or acquisition. The general rule is that the seller retains liability for any pre-transaction qualifying events (i. e. , existing COBRA beneficiaries). The exception is if the seller ceases all health care plans and the buyer has a plan. In this case, if the buyer is a successor under federal regulations, he will assume responsibility. A buyer is considered a successor if he continues the business operations associated with the purchase without interruption or substantial change and the seller ceases to provide any group health plan to any employee in connection with the sale (26 C. F. R. 54. 4980B-9, Q&A-8).

Fred

: When Company A acquires Company B through an asset acquisition, and runs the business of Company B, including maintaining corporate offices, fixtures, fittings, client lists, business records, etc - as well as some of the prior employees of Company B, does Company A have an obligation to offer COBRA coverage to the former employees of Company B. Company B cancelled its health care plans upon the asset sale. It feels to me like the asset sale was a tactic for the acquiring company to avoid liabilities, including COBRA.

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Subject: Re: Re: COBRA DISCONTINUANCE UPON ASSET SALE

Comments:
: Mark : Sadly it's a tactic that will work. Trying to convince the gov of an owners motivation, is a difficult thing. Companies do things to avoid liability often. Some legal, and ethical, some legal but unethical. You could complain to the secretary of labor or the IRS, and make them aware of the company dumping the health insurance, but it would be more of a personal "crusade." : If the plan ends, there is nothing to continue. COBRA would not apply. If the buyer had a health care plan, that would be dif. : Federal regulations provide little guidance on the impact of a company sale or acquisition. The general rule is that the seller retains liability for any pre-transaction qualifying events (i. e. , existing COBRA beneficiaries). The exception is if the seller ceases all health care plans and the buyer has a plan. In this case, if the buyer is a successor under federal regulations, he will assume responsibility. A buyer is considered a successor if he continues the business operations associated with the purchase without interruption or substantial change and the seller ceases to provide any group health plan to any employee in connection with the sale (26 C. F. R. 54. 4980B-9, Q&A-8). : : <a href="http://www.dpbolvw.net/click-3771903-10481703"> : <img src="http://www.tqlkg.com/image-3771903-10481703" width="300" height="250" alt=" Think You Can't Afford Quality Health Insuranc" border="0"/></a> : Fred : : When Company A acquires Company B through an asset acquisition, and runs the business of Company B, including maintaining corporate offices, fixtures, fittings, client lists, business records, etc - as well as some of the prior employees of Company B, does Company A have an obligation to offer COBRA coverage to the former employees of Company B. Company B cancelled its health care plans upon the asset sale. It feels to me like the asset sale was a tactic for the acquiring company to avoid liabilities, including COBRA.

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