Question of the Month: Are Hospital Indemnity Plans COBRA Eligible?

Dear Gina: We have several employees who elected to purchase a hospital indemnity plan through a carrier we made available to them at open enrollment meetings. Because we offered it, is it a COBRA eligible benefit? Should it be on a COBRA notice when they terminate employment?

Answer: Hospital indemnity plans are voluntary plans that supplement your existing group medical plan by helping pay expenses for hospital stays. They are like plans that pay cash for diseases (say cancer coverages), they are not true medical insurance. They help pay household and medical bills to help the employee keep afloat during challenging times. Thus, they do not fall in the category of employer-offered benefits that must be listed on a COBRA notice. Additionally, the indemnity carrier will reach out to the newly terminated employee and ask if they want to continue the policy and be direct-billed for it as it is an individually-owned policy.

– Gina



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