- If the selling entity continues to maintain a group health plan after the sale has been completed, then the selling entity must continue to offer COBRA to qualified beneficiaries.
- If the selling entity terminates its group health plan in connection with the sale, then the buying entity must make COBRA available to qualified beneficiaries, assuming the buying entity has its own group health plan in place. If the selling entity terminates its group health plan and the buying entity does not have a group health plan in place, neither party has the obligation to offer COBRA.
- The buying and selling entities may also structure a contractual agreement which allocates the responsibility of making COBRA available to qualified beneficiaries. However, if the entity who is contractually assigned to provide COBRA fails to meet its responsibilities, then the entity that has the obligation to provide COBRA (according to bullets #1 and #2) assumes the liability for making COBRA available to qualified beneficiaries.
For more details, please refer to Reg § 54.4980B-9.
The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.