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Alternative COBRA coverage


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Employee goes on worker's comp. Only full-time employees are eligible for coverage under company's group health plan, so employee could have been dropped due to his reduced hours. However, company does not cut-off group health coverage, but continues to cover the employee on worker's comp just as if he were a "regular" employee. After 25 months, company discovers its error. Of course, company gave no COBRA notice when employee went out on worker's comp.

Is the company still obligated to offer COBRA to this individual or can the company "credit" the 25 months of coverage it provided against the COBRA maximum coverage period?

The regs (54.4980B-7, Q&A7) seem to allow the company to credit the alternative coverage. My concern is whether the failure to provide a COBRA notice is fatal to that position.

Any thoughts?

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The employee has 60 days from notification to decide whether or not he wants to elect COBRA. Because he or she was never notified, you could run into a problem by simply cutting off his or her medical insurance. I would send out a COBRA letter as soon as possible and allow the employee to continue benefits for 29 months if he or she is still disabled. Better safe than sorry.

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Guest bwells

I agree that the safest course is to provide the COBRA notice, but what happens if the insurance company doesn't want to cover the individual? Could the insurer argue that the employer has already provided all of the required COBRA coverage, and so they are not obligated to continue to underwrite the individual?

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That's a good question. I have two thoughts on it: first, if J2D2's company is experience rated, it wouldn't really make too much of a difference. If the company forgot to offer COBRA and this employee happened to run up claims, then the company has the problem of dealing with the extra renewal increase.

Secondly, since the company has been paying this employee as a "regular" one, the insurance carrier really wouldn't know about the situation. If the company now changed the employee to COBRA, the carrier would extend coverage for 29 more months.

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