1. John Jacob, age 47, was terminated last week and has applied for continued health coverage. How long may he stay on the company plan? Explain.

John Jacob is entitled to continue his health coverage under COBRA for 18 months. This is because he was terminated from his job for any reason other than gross misconduct. Gross misconduct is defined as conduct that is so severe or willful that it would be considered a fundamental violation of the employer’s trust. In this case, John Jacob was not terminated for gross misconduct, so he is eligible for COBRA.

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. It is a federal law that requires employers with 20 or more employees to offer continued health insurance coverage to employees who lose their jobs, their spouses, or their dependent children. The coverage must be offered at the same premium that the employee was paying before they lost their job.

The 18-month period of COBRA coverage begins on the date of the qualifying event. In this case, the qualifying event is the termination of John Jacob’s employment. John Jacob can choose to start his COBRA coverage at any time during the 60-day period that begins on the date of his termination. However, if he waits longer than 60 days to start his COBRA coverage, he will have to pay a higher premium.

2. Timothy McFay, age 37, was terminated last month for deliberately starting a fire in the warehouse. While no one was injured, the company lost $175,000 in product that was about to be shipped to an important client. Mr. McFay has applied for continuing health coverage. Is he entitled to it? Explain.

Timothy McFay is not entitled to continue his health coverage under COBRA. This is because he was terminated for gross misconduct. Gross misconduct is defined as conduct that is so severe or willful that it would be considered a fundamental violation of the employer’s trust. In this case, Timothy McFay deliberately started a fire in the warehouse, which is a clear violation of the employer’s trust.

Even though Timothy McFay was not injured in the fire, the company still lost a significant amount of money. This shows that his actions were not only reckless but also costly to the company. As a result, Timothy McFay is not entitled to COBRA coverage.