COBRA termination from carrier every month?

[Guest JTrini8302]

I am a broker working with a client, whose medical insurance carrier is insisting they terminate active COBRA participants at the beginning of each month until their premium is received. COBRA is administered by a TPA, and the carrier does not have the capability to "suspend" claims.

Our interpretation of the COBRA law is that COBRA members are given a grace period to make payment, and are terminated after that grace perioid if payment is not received - not before.

Other than being a logistical, administrative and service nightmare, is this legal? Is there a loophole in the COBRA law that could have any attorney willing to give their blessing to a carrier to administer this way? Any advice is helpful.

The carrier is located and services employees in the state of Connecticut, though I don't think this has any bearing considering the law is Federal. Thanks.

[Steve72]

I'm not sure I understand your question, but if you're asking what I think you are;

The grace period is for the employee to pay the employer. Unless referenced in the contract, the insurer does not have to extend the grace period to the employer's obligation to pay the premium.

This can result in the employer being required to "front" the money for an employee who does not pay until the end of the grace period.

[Sandra Pearce]

The Department of Labor's proposed COBRA Model Notice includes the following:

Although periodic payments are due on the dates shown above, you will be given a grace period of 30 days to make each periodic payment. Your continuation coverage will be provided for each coverage period as long as payment for that period is made before the end of the grace period for that payment. However, if you pay a periodic payment later than its due date but during its grace period, your coverage under the Plan will be suspended as of the due date and then retroactively reinstated (going back to the due date) when the periodic payment is made. This means that any claim you submit for benefits while your coverage is suspended may be denied and may have to be resubmitted once your coverage is reinstated.

If you fail to make a periodic payment before the end of the grace period for that payment you will lose all rights to continuation coverage under the Plan.

We have a TPA administering our claims and we send notice of payments to the TPA weekly. Our notice provides the period of coverage paid by the COBRA participant and that information is updated in the claims system. If a claim is received during the grace period, and the payment for the month has not been received, the claim is denied.