COBRA Ineligibility on Gross Misconduct Termination

Summary

This practice note discusses an exception to the general health continuation coverage rules under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) that may apply when an individual's employment is terminated due to the individual's gross misconduct. COBRA generally requires employers with 20 or more employees that offer healthcare benefits to provide continuation of that coverage to qualified beneficiaries if coverage is lost due to a qualifying event, such as a termination of employment. If the gross misconduct exception applies, the employer is relieved from complying with any COBRA obligations that might otherwise arise due to the termination. Since there is no single well-defined standard for the gross misconduct exception, practitioners must turn to the courts for guidance when advising their clients.