Employee failed to enroll during mandatory open enrollment.

[Guest TeriWB]

An employee failed to enroll for health coverage during a mandatory open enrollment (Oct. 99) so her previous coverage was terminated eff. Jan. 2000. Employee now states that she was never notified that there was an open enrollment and should have been notified that coverage was terminated and should have received a COBRA notice. Since loss of coverage due to Open Enrollment is not a COBRA event do we have anything to worry about? Employee is threatening to sue the Company based on failure to advise her of OE and COBRA. What are our risks?

[Guest Ray Goetz]

I agree that this is not a COBRA event, and that there should not be a danger of liability from not sending a COBRA notice.

However, I do think there is some general risk, from arguably not providing sufficient open enrollment notice (and followup). This is not because of a violation of a specific legal rule, but because of the general legal concepts (in the ERISA cases) that: (1) the employee may have reasonably and detrimentally relied on employer actions that indicated that coverage was continuing, and (2) the employer probably has some level of fiduciary duty to make sure that persons don't lose their coverage from not getting/understanding the OE materials.

I believe most employers avoid this problem by automatically continuing an employee's existing health plan elections, unless the employee makes an affirmative change during the OE.

If it was me, I would consider bending your normal procedures for this person, and allowing them to retroactive enroll.

[Brigid Anderson]

I agree with Ray's COBRA conclusion--there has been no qualifying event. Assuming your are subject to HIPAA, certficates of creditable coverage are, for course, another matter.

I also generally agree with Ray's concerns about employees not being informed about enrollment procedures. But what did this person know? Had they re-upped in the past? Is the enrollment option explained in the SPD and did this person get a copy? Unless the person can show she was totally in the dark, I wouldn't jump to the conclusion that you've got to retroactively enroll her, but without a whole lot more information about your plan, your procedures, general communications with employees and the facts of this particular case it is very hard to offer specific advice.

[Kirk Maldonado]

I disagree with Ray. If you make an exception this time, you will need to make it everytime in the future. If you waive the condition once, there is a risk thatyou can never enforce it again. I wouldn't recommend a client start down that slippery slope.

[Guest nac]

A little more HR fence-straddling . . .

Before you leap to either retro benefits or give the ee phone #s of good attorneys, let's review the situation.

Were OE materials sent home? could they actually have gotten lost in the mail?

Does this ee work in a main office location where OE reminder notices were prominently posted and communicated? or is she in a remote office where she conceivably might not have been notified?

Do you follow up with ees prior to benefit term date when no response is received?

What it boils down to is the amount of diligence on the part of the company to ensure that the ee was notified of the OE period. I'm not a fan of hand-holding myself - I have 3000 actives and 1800 retirees to deal with and there are some real crybabies out there. But we go to some extraordinary lengths at times to be sure we capture all the data we need at enrollment time.

My point is this: if there's a possibility that your communication to this ee may have failed in some way, then you should look at retroing back. If, however, this ee is situated the same as everyone else and you're comfortable that she had the same opportunity and notification, then by all means, give her the name of a good lawyer.

Understand, I hate being a fence-straddler, but I would encourage you to look at this more closely and be sure that the company was diligent.

You also don't mention whether this is a fully-insured or self-funded plan, which can have an impact on your ability to retro an enrollment.

[Guest Mary Singleton]

I completely agree with nac. I have been in the same situation before while working for a company of 30,000 employees. Although you do not want to make an exception and possibly set precedent, you must consider just how diligent you were in communicating the enrollment period to this employee and on follow-up to make sure that no one slipped through the cracks.

Our company set up an appeals committee for situations like this and generally found that it was better for all parties to make an exception than to take a chance on litigation. I would just make sure that this employee is told just how big an exception to the rule that this is and that in the future they must adhere to the rules.

[Guest TeriWB]

Thank you everyone for your responses. We decided to make an exception for this employee (even though she had been more than adequately notified of open enrollment - and we have proof) because she had incurred significant medical expenses from Jan.-June. And, with the help of the HMO carrier had no trouble in making her coverage effective 1/1.