Extension of Benefits Concurrent with COBRA

[PhilB]

MY company has numerous health plans in place that provide for an extension of medical benefits in disability situations. It has been the company practice to run the extension concurrent with COBRA.

As an example, if an employee goes out on STD or LTD, medical benefits are extended up to the maximum period of disability coverage - and COBRA runs concurrently. However, it has been their practice to send out the COBRA notice AFTER the extension runs out, with only the remaining COBRA coverage period available. So, if an employee is out on STD for 26 weeks, the medical benefit is extended, and at the end of the 26 weeks, a COBRA notice is sent stating that they may elect up to 12 months of coverage under COBRA (the first 6 having been used during the extension and the cost covered by the company). In the case of LTD, they might NEVER send a notice if the extension runs longer than the COBRA coverage period.

In addition, it isn't stated anywhere in the SPDs thast we are running COBRA concurrent with the extension of benefits. The reasoning is thus: "The law gives employers the right to run COBRA concurrently with extended coverage. That being the case, its not necessary to restate those legal rights in the SPD. There are innumerable examples of where administrative procedures are not stated explicitly and it doesn't compromise the exercise of those rights."

I'm concerned over the lack of language in the SPD and the late notices........am I off base here? Any regulations regarding these specific items?

[mroberts]

First off, an employee has up to 60 days from notification to elect COBRA benefits. Therefore, if you are not notifying your employees out on disability of this right until after the 26 weeks are up, you can't turn around and only allow them to continue coverage for only 12 months.

Additionally, employees who are disabled have a right to continue benefits for 29 months, not 18.

What I would do is run FMLA concurrent with any short-term disability. After the 12 weeks is up, I would go ahead and advise these employees of their COBRA rights. You can go ahead and indicate how long the company is going to pick up the insurance premiums in this letter and after a certain point, the employees will have to take over payments. I would also change my handbook so that there is no question in any employee's mind as to how long coverage is going to continue for and how much the company is going to pay towards it.

[Mary C]

While I agree about providing notice as the start of COBRA, be careful about putting in writing that all employees who are disabled may have COBRA for 29 months. In order to qualify for the 11 month extension (after the initial 18 months), the employee must be determined by Social Security to have been disabled on or before the qualifying event, or within the first 60 days of it. (not all of our participants who left disabled get a Social Security Award) And if they were determined to be disabled as of the qualifying event and eligible for the extension COBRA could terminate early if they should become eligible for Medicare before the end of the 29 months.