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Can We Still Be Eligible for Cobra Insurance If My Husband Is Terminated Due to Refund Fraud?

Workers who are laid off or otherwise separated from their employers may continue their health insurance benefits under COBRA. Employees who are fired for cause are also eligible for these benefits, unless they are fired for "gross misconduct." Unfortunately, gross misconduct is not defined under COBRA, leaving courts to interpret what it actually constitutes. Illegal acts have generally qualified, meaning companies probably can deny COBRA coverage for theft.

  1. State Laws

    • Many states have laws governing when you can be fired and the consequences of termination. Employees fired for cause or misconduct may be ineligible for unemployment benefits. Some courts have relied on the definitions of misconduct found in state laws for the purposes of COBRA. Federal courts relying on state laws have found that theft constitutes gross misconduct, according to Ralph Peterson, a Florida Lawyer writing in Business Management Daily.

    Defined By Policy

    • Some employers define gross misconduct through policy, and most that do so say that theft is gross misconduct. In a case involving the grocery chain Food Lion, a court found that defining gross misconduct was sufficient for COBRA purposes. In that case, the employees were not fired for fraud or theft but for failing to follow an order from a supervisor, which the company defined as gross misconduct.

    Having Proof

    • Companies that do not comply with COBRA face stiff penalties of about $100 per day or $200 for a violation. The COBRA Handbook recommends that employers be able to document their claims of misconduct beyond a reasonable doubt. In close cases, the most conservative course of action for a company may be to simply offer the coverage. The former employee can be asked to pay up to 102 percent of the premium.

    Other Misconduct

    • While there isn't a uniform definition of gross misconduct, several court cases have arisen to offer guidance to employers -- and employees who feel they have been wrongfully denied coverage. Workplace violence has been found to be gross misconduct, as well as serious domestic abuse against a co-worker in cases where romantically linked individuals work together. A security agency that lost a contract because a worker lied on his employment application successfully denied benefits to a security guard. Because state laws and company policies may vary, these situations may not apply in all locations.

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