Is your Employee Assistance Program (EAP) subject to COBRA?

The not so simple answer is… it depends…

In order to retain and attract employees, employers offer benefits.  Employee Assistance Programs (EAPs) can offer an array of benefits covering areas such as financial, legal, parenting, elder care, substance abuse, as well as physical and mental health issues.  

Never before has the issue of employees’ mental health been more universally recognized for its importance and impact on workers’ ability to maintain productivity and enjoy an appropriate work-life balance.  More and more, employers are offering mental health benefits through their EAP. 

COBRA’s continuation of benefits applies to “group health plans”.

Generally, a benefit is “a group health plan” if it satisfies two criteria:

  • It provides medical care: and
  • It is maintained by the employer, whether the employer contributes to the plan or not.

All EAP’s are not the same and the services that are offered need to be looked at carefully to determine if it will be subject to COBRA. For example, some EAP’s will offer referral-only services based on the employee’s situation and will only provide them a list of counselors.

In DOL Advisory Opinion 91-26A, the DOL concluded that a referral only EAP, staffed by persons who were not trained counselors, did not provide medical benefits and so was not an ERISA welfare benefit plan.

Other EAPs’ are staffed with a trained counselor(s) or psychologist(s) that can provide counseling.

The key to determining if your EAP is subject to COBRA is identifying whether or not your EAP is providing medical care. Under ERISA, a group plan must provide “medical care” within the meaning of IRS Code section 213d. “Medical care” includes the diagnosis, cure, mitigation, treatment or prevention of disease and any other undertaking affecting any structure or function of the body.

An EAP that simply provides a referral service would not be subject to COBRA, while an EAP that provides direct counseling and support by on-staff professionals clearly offers the diagnosis, treatment, and prevention of mental health issues and as such is providing medical care and thus would be subject to COBRA continuation of benefits.

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NOTICE: This is not legal advice and should be viewed for educational purposes.