Employer Cancelled PEO Health Insurance

[somarco]

Your situation is a bit trickier since someone on COBRA is no longer an employee.

Logic would say the employee can stay on COBRA since the employers action has no direct bearing on the former employee. Not saying logic works, but you get the idea.

Would former employees also have their COBRA cancelled if the employer went out of business or was acquired by another company?

There was someone on the forum who posted a few times that worked for a PEO. Would be nice if he was still lurking to answer some of these questions.

 

[leevena]

I had this exact situation pop up this morning. The PEO was canceled by the employer. A former employee had Cobra coverage and now is being told that coverage will end.

I could not answer the question.

If the employees are being leased back to the company then I would think the PEO plan would have to honor Cobra. technically the employee was a working for the PEO.

Was the health plan contract with the PEO or with an employer that was inside the PEO. That is the key to many of these questions.

If an employer was in a PEO, but had their health coverage via a contract directly with the healthplan, and that employer cancelled the coverage, then there would not be cobra extension available.

If the case of the former employer, since the original employer went away, their cobra coverage will also go away.