COBRA & General Releases

[Guest jg2112]

If an Employee is terminated and elects COBRA continuation coverage and then is given severance pay provided he signs a general release, does the signing of this general release give the Employer the right to terminate the Emoployees COBRA Coverage?

[jeanine]

COBRA coverage may be terminated by an employer:

1. if the employer no longer offers any group coverage to any of its employees;

2. if the premium is not paid on time;

3. if the covered person becomes covered under another group plan after they elect coverage and their is no pre-existing exclusion relevant to the covered person in the new plan;

4. person becomes eligible to medicare after the date cobra coverage was elected;

5. person has 29 month extension due to disability and person is no longer disabled.

Based on the limited information provided, it may not be allowable to terminate. What exactly does the release say? Does it specifically mention COBRA? COBRA is an independent right. Any waiver would have to be specific.

[Guest jg2112]

The release does not specify waiver of COBRA. What you are saying then is as long as the release does not specify that the employee is waiving his/her right to elect COBRA then the Employer may not terminate. Is there anything that prohibits a waiver of an individuals COBRA rights in a general release?

[Kirk Maldonado]

The DOL has informally stated that an employer cannot enforce a waiver of COBRA rights.

[Guest jg2112]

Kirk,

Thank you for the reply but is there some place I can find the information to back it up?

[jeanine]

Are you the employee or the employer trying to enforce this? Without knowing your level of COBRA knowledge its a little hard to point you in the right direction. From this site, if you go back to about Dec 1999 through early 2000, you will find all kinds of information on COBRA through COBRA 2000 clarifications issued by the IRS.

[Guest jg2112]

We represent the employee. The employee was terminated from employment, he sent a demand letter to the employer requesting severance pay. The Employer is willing to give the Employee severance provided he signs a general release of claims. The Employee elected COBRA as soon as he was terminated and has been paying the premiums for three months. Our question is if the employee signs this release will it give the Employer the right to terminate his COBRA coverage or does the general release have to specify the waiver of COBRA coverage? If the general release does specify the waiver of COBRA can it be terminated since he has already exercised his right to elect. I beleive that the answer is no - the Employer will not be able to terminate coverage until after the 18-month period. However, I am unable to find anything to back this up.

[QDROphile]

Why don't you just address it expressly in the release? Who is trying to smoke whom?

[GBurns]

No one can sign away a constitutional right nor can they waive a federal law requirement.

A simple call to a lawyer who specializes in Contract Law or the Law Library librarian should provide a reference and cites.

A search on one of the law sites should help.

[KIP KRAUS]

Kirk is correct. By the way if you look at his profile you’ll see that he is an attorney.

I recall reading about at lest one case where a person signed off on COBRA coverage, but changed his mind during the election period and was still able to elect COBRA.

I’ve seen a number of general releases, and never have I seen any that try to release an employer from statutory benefits such as COBRA, Workers’ Compensation, Unemployment Benefits, etc.

[Kirk Maldonado]

The DOL position was stated in response to a question posed by the ABA association a number of years ago. Unfortunately, the DOL responses are "informal," so that they can't be cited as authority.

I am very familiar with this issue because I am the one that submitted the question.

[Guest jg2112]

Kirk,

Thanks for all of your help.

[QDROphile]

Thank you for correcting my grammar.

[KJohnson]

On the other hand, the following is from the regs:

Q-5: Can an employer or employee organization withhold money or other benefits owed to a qualified beneficiary until the qualified beneficiary either waives COBRA continuation coverage, elects and pays for such coverage, or allows the election period to expire?

A-5: No. An employer, and an employee organization, must not withhold anything to which a qualified beneficiary is otherwise entitled (by operation of law or other agreement) in order to compel payment for COBRA continuation coverage or to coerce the qualified beneficiary to give up rights to COBRA continuation coverage (including the right to use the full election period to decide whether to elect such coverage). Such a withholding constitutes a failure to comply with the COBRA continuation coverage requirements. Furthermore, any purported waiver obtained by means of such a withholding is invalid

[QDROphile]

We can't tell if the employee is entitled to severance pay. The post by KJohnson shows that it makes a big difference. If entitlement is uncertain, or if the employee is not entitled, then the offer of a payment to settle, including whether or not the employee will agree to quit the COBRA continuation, is up for grabs. If the employee is entitled, most states have laws that penalize employers for holding the payment too long after employment terminates.

I got the sense that the employee wanted to continue coverage. Unless the employer wants to terminate coverage, the continuation of coverage should be expressly carved out of the release so the employee can quit worrying about the effect of a general release on the continution.

If the the employer wants coverage to stop and the employee is entitled to severance, the employer needs to answer to the regulations for using the severance pay to pressure the employee, and may have problems with stay wage laws.