Laid-off workers don’t get COBRA

Adventist Health Systems is not offering extended medical benefits under COBRA to an estimated 100-plus employees laid off from now-defunct South Coast Medical Center, claiming the organization is exempt from the federal law because of its affiliation with the Seventh-Day Adventist Church.

Instead of obtaining 18 months of coverage, subsidized by the federal government under the 2009 stimulus plan, former employees were offered in-house health coverage that ends after six months — unless the ex-employee is unable to work due to a disability.

COBRA — which stands for Consolidated Omnibus Budget Reconciliation Act of 1985 — is a federal law that requires most employers to provide access to group health insurance for employees who are laid off or otherwise lose their company-paid health benefits. The ex-employees pay for the insurance.

“We are designated as a church plan and never dealt with COBRA,” said Kathleen Wilson, corporate director of Benefits for Adventist Health, which is in Roseville.

Adventist officials acknowledge, however, that COBRA had been listed in the employee handbook despite the alleged exemption from the law. Adventist took over South Coast Medical Center in 1998.

COBRA was offered under the hospital’s previous ownership.

“It’s not clear why it was left in the handbook” after Adventist took over, Adventist spokeswoman Alicia Gonzalez said.

Mary Nobriga, a transportation employee whose job ended Tuesday when the hospital was turned over to Mission Hospital, said she was stunned when told that COBRA would not be offered. Nobriga has worked for the hospital for more than three years.

Nobriga said employees were confused at a meeting held in May in which they were informed of the post-employment health benefit.

“We were told ‘no COBRA,’ but the employee handbook says it in black-and-white,” Nobriga said. “When I talked to HR [human resources] they said to disregard the employee handbook.”

COBRA insurance can be costly for the unemployed, but under the recent federal Recovery and Reinvestment Act of 2009, those with COBRA coverage pay only 35% of the COBRA premiums.

The remaining 65% is reimbursed to the coverage provider through a tax credit.

That would make COBRA coverage very affordable for her, Nobriga said.

Wilson said the Adventist health benefits are “generous,” including three months of free services at an Adventist hospital for full-time employees who had lost their jobs, or reduced-rate group insurance.

The Adventist health benefits offered to laid-off workers provides free coverage for three months at an Adventist facility, or the ex-employee can purchase Blue Shield coverage at a reduced rate.

“The employees are pleased with what we’re offering,” Wilson said. “It’s an extraordinary benefit.”

Wilson added that Adventist has lowered the deductible for the insurance plan from $1,000 to $500 for laid-off workers, and the plan includes dental and vision insurance as well.

“After six months, if they have a disabling condition and can’t work, they can continue [on the plan] for another 12 months,” Wilson said.

Nobriga, who has high blood pressure, said she is not happy with the prospect of driving 120 miles round trip for routine medical tests and services at Loma Linda Hospital, the closest Adventist facility to her Aliso Viejo home.

“As a faith-based organization, they should be more sensitive to people and take care of their employees,” Nobriga said. “It’s very contradictory.”

Laguna Beach labor attorney Diana Cimino, who was asked to look into the issue by some of the laid-off workers, said Adventist may be on rocky ground in denying COBRA because the employee handbook lists COBRA among the benefits. Cimino added that the hospital may also have a hard time claiming an exemption as a faith-based organization because other church-affiliated hospitals she is aware of are not exempt. There are many issues at play, she said, such as “How does the Adventist Church interface with the hospital?”

Even if Adventist were exempt from COBRA as a faith-based organization, the fact that COBRA is listed in the handbook obligates the health care firm to provide it, Cimino claimed. Gonzalez said the handbook was printed in 2005 and updated every year.

“At the beginning of each year, benefits are updated including those involving the employees’ health plan and coverage,” she said.

“Employees are regularly told that the latest information pertaining to their health care benefits is available to them through the Summary Plan Description which is revised annually and available online or through the Human Resources Department. In addition, HR communicates changes related to benefits in a variety of ways — at an annual Benefits Fair, via house-wide e-mails and town hall-type meetings.”

But Nobriga said that in her three-and-a-half years at the hospital, she had not been made aware of changes to the handbook.

“New hires were given the same handbook” with the same benefits information as contained in hers, she added.

Cimino said she doesn’t understand why Adventist would not provide the COBRA option, since the insurance is paid for by the employee, not the company.

“There is an administrative fee [for COBRA],” but no other costs to the company, she said.

And there is a stiff penalty for not offering COBRA coverage — a fine of $110 a day.