leevena

May I make a suggestion to you. Could you take a few moments and provide more information? Your question is very vague, not blaming you at all, what you are asking about can go in a variety of directions. As a starting point, how many members, how many employer groups, geographical area, and why you believe your plan is a better solution. Also, if you were to do this, are you planning on outsourcing the administration, or doing it in-house? There will be more questions I am sure, but this will point us in the right direction.

So if the employee terms on the 15th, cobra eligibility will be the 16th. Employer should check with the carrier, but they should receive a refund for the prepaid monthly premium for this employee. COBRA will be a 7/15-8/14 going forward.

Chaz, do you have the correct dates in your example? Your question asks if the employer terminates the health plan on July 30 th will they need to continue for post-closing employees, but those were to stay on till only July 15th. For the June 20th employees you should consult the plan documents to determine when their active coverage ends, some are written as on the day of termination, some as of end of that month (June 30th). The post-closing employees would stay covered as active employees until their termination. Once the health plan is terminated, all lose coverage. But as above, you should consult the plan documents and the carrier as to what the administrative policy is for this situation.

There are 2 methods of developing the cost of claims in a plan. Experience rated is a method whereby the groups actual claims experience is used to calculate the next years expected claim cost. The larger the group enrollment the more predictable the claim experience. Non experienced is a method that does not take into account the actual claim experience of the group, rather it uses the carriers pool or book rates. Self funding is not the same, it is a method to fund the plan. Self funding transfers some/all of the risk to the plan sponsor. As a general rule, self funding uses “experienced-rated” costs, but in recent years you can find level Funded self funded plans utilizing non-experience rated costs. A fully insured plan can have both experience and non-experienced rated.

I agree with Chaz, ERISA preempt state law, including any type of state mandated extension of coverage.

I am assuming the plan is a group policy, is that correct? First, please check the plan documents for cancellation for non-payment of premium provision. Most group plans allow for a 30-day period, but it could be longer. This is a state requirement and not ACA. I do not know of any state that requires longer than 30-days. When an employee loses coverage they usually need to wait for open enrollment time, which is also in the plan documents. Lee

Good point until the end when you state “what is up for debate”, because the question asked was if the policy is legal.

All good points about fairness. But keep in mind the OP is asking if it is legal.

An employer can do it any way, no need to ask marital status when the employee selects coverage. Remember, a married employee does not need to select family coverage, in fact many dual income couples will select single for one and single for the other.

If you receive your benefits info and it gives you your cost for single, dep., family, how in the world would anyone think they are getting the same compensation?

It is legal. Why do you ask, what do you find discriminatory?

My bad, I thought the coverage was already cancelled. Be that as it may, they can very well cancel for nonpayment. I am not recommending anything because I do not know the past due amount, what their current medical situation is (claims) and how much time is left on cobra. This is not a great vehicle for discussing complex issues like this situation.

My point was not to cause problems, it was to help the poster. Your statement above states you don’t see a legal basis for them to cancel, so the poster may walk away from this with the belief they have a legal right to reinstatement, which they do not. Regardless of anyone’s opinion, the cobra recipient did not pay on time.

I 99% disagree with your comment regarding a legal basis for them terminating the cobra coverage, so please provide proof. But am open to learning how/why you believe it is illegal. This is a relatively simple relationship. I assume there is a carrier here, and they have a responsibility to provide cobra coverage to ex employee. The administrator responsible for sending out the cobra info and for billing made the mistake, not the carrier. As far as carrier is concerned, the coverage is not being paid.

Ester50, I understand your frustration but your employer does have the right to collect these amounts even when they miscalculated the costs. Yes, you could hire an attorney, as suggested above, but to what end? Your legal fees could easily equal or surpass the past premium amount, and you would still owe the past due amount.

Good point, I was thinking about a paper claim submittal. My point still remains, there is a bigger issue here that the employer should address, as to why the employee cannot understand the procedures. Changing my reply, lol.

As a general rule, the answer is no. You appear to have a bigger issue here and you may want to resolve it quickly before it escalates. The FSA rules require substantiation of the expense and if not provided the reimbursement can be, and should be, denied. But to turn off the card raises this to another level, and while I understand the frustration, I do not recommend such an action. Rather, just deny any other reimbursement amounts not substantiated. Keep in mind, this benefit is an ERISA benefit, funded with employee money, not employer money.

Thank you for the additional information, it is very helpful. If I understand the situation, coverage was in effect for July, August, September and October of 2018. Monthly cobra premium was $210.75. There were 2 separate payments, the first was $632.25 for the first 3 months and the second for $210.75 for October. The administrator did not receive any additional premium payments and cancelled your coverage as of November 1, 2018. Based on what you have provided it does appear that the administrator was correct in cancelling your coverage for non-payment of premium. And, yes, they are within their rights to cancel and not reinstate. In your original post (at the end) you agree with my assessment and question the reliability of the administrators process, which is fair This is where I do not have enough information to give you a complete answer. What we do know is that the process did work at least once for you, the last payment of $210.75 for October. Once set-up, these processes run smoothly, and if there are problems it is usually with everyone’s account, not just one. Is it possible that the administrator sent the request and your bank did not pay? I would also ask, how did you not know, were you not balancing your account?

Additional information...no way, just the pertinent facts. Your response is long and rambling, leading me to believe you are at fault. But I will give you the benefit of the doubt for now, but it does appear that you may have made a late initial payment. 1. What was your date of separation. 2. Did you have any extension (non-cobra) of health benefits? It appears that you may have had coverage thru the end of June. If yes, provide dates of this extension of coverage. 3. What date did you sign-up for coverage in September? 4. It appears that your first payment for cobra coverage was the payment you referenced as being duly processed on 10/2/2018. Is this true? If not, please explain. 5. What date did the company receive a payment from you, and how much was that payment. Keep in mind, I do not care about what date your bank duly processed the payment, only the date that it was received. 6. What is the monthly cobra charge?

I am a little confused by your post, sorry. You state that COBRA started mid-sept, but you paid 3 months premium on October 2? When did you become eligible for COBRA? What do you mean by automatic payments were set-up at the bank? What is a payment request, and what do you mean it was sent to the bank?

There is not enough information presented, nor is this the best vehicle for a discussion such as this. Short answer is yes, but you need to be careful. Let’s assume a new plan is being implemented 1/1, the plan documents provided to employees during open enrollment define the expense as eligible but when the SPD is developed and/or the claim procedures were developed by the TPA, it was defined as ineligible. (This has actually happened) Clearly this can be overridden. Now assume the overrides is for a HCI, and it is done multiple times for other HCI’s. You are now in a different world, with 105 implications. My point is, be careful as you think through this. If it is a one-off and you have good, substantiated reasons to override, do not worry. Anything else, you may want to engage an attorney.

I read the regulations and have 2 thoughts for you. The first is you should hire a benefits attorney, creating a MEWA to solve this problem is highly unusual. The second is you should discuss this with the current plans’ underwriters/vendors (if you have not already) and make sure they are willing to go along with this idea. I assume the contracts are issued to the company selling the division and the sold division would essentially have no coverage. This not the best forum to discuss this, too many questions and not enough info. There is a member here, Chaz, and he is a good source for many things.

Expenses paid for the purchase of electric toothbrushes are reimbursable when submitted with a physician's diagnosis letter. My suggestion to you would be to tell the employee that the expense is not reimbursable until a diagnosis letter is submitted to you/administrator. The term “recommended” means nothing.

Your post popped up as I was posting my reply, see my suggestion above about you replying to my post. Do you agree with my suggestions?

Do not apologize, there is a good possibility that you are correct. There are many variables that can make this discussion, on this forum, very difficult. To begin with the rules/testing can be complex, there are safe harbors, and group size considerations. There are 3 parts to the Section 125 Discrimination testing; Eligibility, Benefits & Contributions, and Key Employee Concentration. The eligibility test looks at whether a sufficient number of non-highly compensated individuals are eligible to participate in the cafeteria plan. If too many non-highly compensated individuals are ineligible to participate, the plan will fail this discrimination test. The key phrase here is “if too many non-highly compensated individuals are ineligible to participate”. I have 2 suggestions, first is await a response from Chazm, he is very knowledgeable about this. These other is familiarize yourself with the testing requirements. One of the questions you should ask these groups is for a copy of their non-discrimination testing results. If they do not have one there is a good chance they are at risk.