Uncashed COBRA refund checks

[Guest CWells]

Can someone point me in the right direction?? I have a situation involving uncashed refund checks. For example, a COBRA participant is allowed an extended grace period to make up a payment that's short by an insignificant amount. The remaining balance is not paid and we've sent a refund of the portion that was paid.

What happens when these checks are not cashed? Do ERISA's plan assets rules continue to apply? Do state escheatment and unclaimed property rules apply?

[Guest b2kates]

is there a separate trust holding the funds or are they held a part of the general assets of the plan sponsor?

[Guest CWells]

We are a TPA. A refund check is written against the account that we maintain and into which the premium check was originally deposited.

[Guest b2kates]

if it is not in an ERISA trust subject to the anti alienation rule; it would appear that ultimately it would escheat to the state.

BTW, why not make a phone call to the participant who made the partial payment?

[GBurns]

Do you know for sure that the check was even received?

[Guest CWells]

The check was not returned and the participant has not cashed it. When we try to call, we learn the individual has moved and we have no forwarding address. Does there come a point in time when we can stop looking for that participant?

[GBurns]

It seems logical that the check was never delivered to the participant. It is also logical that you would have no forwarding address because that is usually only given to the post office.

Have you made use of the Postal Service's fowarding or Address Correction services? Have you used the NCOA services available either from the Post Office or private providers? Have you made use of the IRS forwarding or location services?

Have you searched this Board for previous threads on this subject or done a Google search?

In other words have you really made a good faith effort or is it that all you have done is mail a check in an envelope?

Trying to pass it off on the state without some might leave you vulnerable and liable if the participant finds out 1 day in the future.