I often feel like raising a picket sign when I look at my phone bill, but that’s another story — right now, I just want to use the news of the Verizon strike to remind you of its COBRA continuation coverage implications.
As has been widely reported, approximately 45,000 unionized Verizon workers went on strike Aug. 7 after their contracts expired.
While the strike isn’t affecting our phone bills or service, it may affect the workers’ health benefits. News reports say that if a new union contract is not agreed to by Aug. 31, the striking workers will lose their health benefits.
How could this happen? A strike is considered a reduction in hours of employment, and typically, health plan terms provide that if a worker’s hours are reduced below a certain point, he or she becomes ineligible for health coverage.
But, as noted in Mandated Health Benefits – The COBRA Guide, a reduction in hours of employment is a COBRA qualifying event that allows covered individuals to elect up to 18 months of COBRA coverage. The issue of whether COBRA was intended to apply to strike situations is quite controversial. But the IRS’ final COBRA regulations clearly note that a strike results in a reduction in hours of employment, even though a termination of employment may not occur. But many employers still believe that the interpretation violates the employer/employee relationship under basic labor law. Even though employees must pay for the coverage during a strike, the fact that COBRA requires employers to make this coverage available is a benefit to striking employees. (Some employers have interpreted this to mean that companies must pay for striking workers’ health benefits, which is not the case.)
COBRA’s basic purpose is to make coverage available to individuals who lose their employer-provided group health benefits. It could be argued that Congress felt that the availability of health coverage should not be a “weapon” in labor relations. However, based on the IRS final regulations, employers should offer COBRA coverage to strikers. Verizon has indicated that COBRA coverage is an option for its striking workers.