Voluntarily Ending COBRA Coverage as a "Change in Status"

[Guest NPWA]

I would very much appreciate the group's thoughts on the following scenario.

The Company has an employee who was covered by subsidized COBRA coverage from his wife's former employer and therefore did not enroll in the Company's health plan during last year's open enrollment. Now he wants to enroll and says he will simply stop paying the COBRA premiums and therefore lose coverage under the COBRA coverage.

I know the regs permit mid-year election changes when there has been a loss of coverage (1.125-4(f)(3)(ii)). It strikes me that this section contemplates losses of coverage beyond the control of the individual and not a loss of coverage voluntarily incurred by the individual. I could not find any authority on point, though.

This situation is clearly not covered by the HIPAA special enrollment rights in Section 701(f) of ERISA because that requires the COBRA coverage be "exhausted."

My inclination is not to let this employee enroll in the group health plan until either the next open enrollment or the occurrence of a true change in status. Any thoughts?

Many thanks--Julie

[Mary C]

If coverage was previously waived due to having COBRA coverage, our company requires that COBRA be exhausted in accordance with HIPAA. We do not consider voluntarily dropping or losing coverage because they didn't pay the premium as a family status change event under 125 to allow enrollment.

[oriecat]

I agree. I had this situation come up also, where an ee wanted to do that. We did not allow her to come on until open enrollment. I also checked with our carrier on this and they would not allow it. Our contract clearly specifies, regarding special enrollment for people who lose other coverage: "... if the other coverage was: under a COBRA continuation provision and the coverage under such a provision was exhausted. Failure to pay premium or termination of coverage for cause do not satisfy this requirement"