COBRA - Prorating of payments

[Guest mls]

I attended a seminar back in April and want to confirm what I thought the instructor said about partial COBRA payments. I am familiar with the short payment rule (ours is $20 - if payment is short by that amount we accept and send deficient premium letter - participant has 30 days to make up premium). At the seminar, the instructor did say that if the employee doesn't make rest of payment, we can term, but we can't refund payment - we must accept and prorate coverage - for example, the employee never pays the remainder of the premium and we cancel the participant's coverage, are we required to carry the participant's coverage through the date he/she paid? Or do we refund? We have refunded in the past, but the instructor implied that by law, we must accept whatever payment was made and prorate coverage. Any thoughts out there?

[Guest BENEFISH]

In cases of significant underpayment of COBRA premium, we do not prorate. We notify participant that the remainder of the premium is due within the current grace period. If not received, it's CURTAINS ON COBRA!!! With new regs, we will notify participants who make an underpayment which is not "significant" that the small remainder is due within 30 days. Even with the new regs, if significant underpayment is received (e.g. they send $100 when they know that the premium is $522.17), we will continue our current policy with no prostration of coverage.

[Guest mls]

Benefish - in your case, do you refund the amount the individual paid that was insufficient who you later termed?

[Guest BENEFISH]

mls, we do not require payment for coverage which is not received. Unless it is close to my birthday, we don't assume that the underpaid COBRA participant intends that we keep the money as a gift. Yes, we send it back.