Are employee assistance programs subject to COBRA?

Provided by Larry Grudzien

Are employee assistance programs subject to COBRA?

An employee assistance program  (“EAP” ) can include any of a variety of employer-sponsored programs that seek to prevent or mitigate personal or family problems that could adversely affect an employee’s productivity.  For most EAPs , a third-party vendor is involved, with certain benefits (usually counseling) provided by the EAP  vendor and other benefits provided through referral to qualified individuals outside the EAP  vendor, as provided in DOL Advisory Opinion 88-04A.

In determining if COBRA has to be offered, the critical issue for the EAP is whether it provides medical care. If it does, the EAP will be considered a group health plan. One common practice is to staff an EAP with trained counselors (whether internally or through an outside service provider) who provide some form of counseling. An EAP  providing this kind of benefit will most likely be subject to COBRA, as provided in DOL Advisory Opinion 88-04A.

A narrow class of EAPs  that provide only referrals to employees in need of medical treatment and that are staffed by persons who are not trained counselors will probably not be subject to COBRA. 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. If medical benefits are not provided, it also follows that COBRA will not apply.

If the EAP is found to be providing medical care and is subject the COBRA, would it mean that the EAP would also be subject to ERISA?

Yes. An EAP  that provides medical benefits will also be a group health plan. The DOL has addressed the issue of whether EAPs  are subject to ERISA by reason of providing medical benefits on more than one occasion as provided in DOL Advisory Opinion 88-04A, and DOL Advisory Opinion 83-35A.

In DOL Advisory Opinion 88-04, the DOL found that ERISA applied to an employer-sponsored EAP  under which employees, spouses, and dependents could obtain “assistance with dealing with major personal problems affecting mental or physical health” through a third-party vendor whose employees, trained in psychology and social work, counseled employees by phone and made referrals to additional resources as appropriate.

In DOL Advisory Opinion 91-26A, the DOL distinguished an EAP under which assistance for “drug and alcohol abuse, marital, personal, and/or other health problems affecting job performance” could be obtained by calling an employee in the company’s personnel office, who had no special training in counseling, psychology, or any related discipline and who merely made referrals based on an annual publication prepared by a state health department. Noting that the EAP  had no counselors, either in-house or on contract, and simply provided referrals based on publicly available information, the DOL concluded that the EAP  was not subject to ERISA based on providing medical benefits.

From these advisory opinions, the DOL has concluded that if an employer-sponsored EAP  is staffed (internally or through an EAP  service provider) by trained professionals who provide any form of counseling, the EAP is most likely subject to ERISA as an arrangement providing medical benefits. It would appear that only a narrow class of EAPs  providing general information about referrals and not staffed by trained counselors can successfully avoid ERISA and group health plan status.

To review the DOL advisory opinions, please click on the links below: