Late notification for loss of dependent status

[Guest spinky96]

On January 1st, one of our employee's dependents were dropped from insurance due to loss of dependent status. The employee did not notify the HR deparment until the end of March of this change. As it is now April, do we still send the COBRA information to the dependents and if so, what effective date should be used if they elect the coverage?

[Guest b2kates]

when did you remove the participant's dependent from partiipating in coverge?

[Guest spinky96]

January 1st.

[oriecat]

Is that when you actually did it, or when you made it effective for? If you knew back then to drop them, then you should have sent the COBRA notice at that time.

[Guest spinky96]

January 1st is the date it was made effective by the insurance company. We did not receive notice of this change until March from the employee.

[jsb]

Why doesn't your insurer advise you of their administrative actions? You need to correct this with them.

This type of stuff, unfortunately, happens all the time. The employee should have notified you within 60 days, but they did not. I suppose you could not send a COBRA notice based on the ee's failure to timely notify. However, you should have been notified of the carrier's administrative actions, but were not. This may (or may not) be enough to make a triable issue. Who is at fault for this, you or the carrier, or both? I don't like trials...too unpredictible. Perhaps you are less risk averse.

You may want to offer COBRA based on correction of some administrative oversights. Be sure carrier agrees to accept the late EOBRA enrollment, based on their contribution to the problem caused by their lack of notification of the admin delete action. Premium still goes all the way back which will act as a deterent to the employee. They may not elect, then this just goes away. Document in detail why COBRA is being offered late in this instance so that you have a very narrow set of facts defining the exception, based on correction of a problem. Then fix the process so the problem won't happen again.

[oriecat]

I'm confused by your response, jsb. Why do you think the carrier did anything wrong? If the employee notified the employer that dependent status was lost, and the employer notified the carrier to cancel coverage as of the loss of status, what actions should the carrier have notified them of? That coverage would be cancelled retro to the loss of status? Obviously they did notify them of that, or spinky wouldn't know that coverage was cancelled as of 1/1.

[jsb]

Oriecat,

Granted, under the law it is the employee's responsibility to notify you of qualifying events. And I don't think the carrier did anything wrong per se, but that depends on Spinky's relationship with Spinky's insurance carriers. However, I would be on the warpath if mine started dropping participants without telling me.

In message 5, Spinky stated:

January 1st is the date it was made effective by the insurance company. We did not receive notice of this change until March from the employee.

This doesn't sound like the carrier ever told them of the admin action to delete the dependent. I don't allow my carriers to take this type of action regarding my participants without notifying me. We receive a monthly listing of actions taken by the carrier.

Does it catch them all? No, but we miss fewer of them and end up with fewer retros to process. With 40,000 covered lives to track, we need all the help we can get from our carriers to keep it all straight.

[oriecat]

It sounds like I am just understanding the situation differently than you. To my mind, the employee would have notified spinky and then spinky notified the carrier. The carrier didn't drop the coverage back in January and not tell spinky (altho wouldn't they notice when the billing was different?), they just dropped it in March (in response to spinky letting them know of the change of status), but it was effective back to January, due to the date of the status change. My plans would never make any changes unless I instruct them to first.

Maybe spinky could clear up the confusion of who did what when.

I do agree though, that at this point it is probably best to still send the cobra papers, even though the notice was late. If this happens a lot, then I would resend a notice to all participants about their notice requirements and the consequences of failing to do so.

[Kirk Maldonado]

My recollection is that the recent DOL final regulations on the notice provisions of COBRA require notice of cancellation. You need to check the effective date of those regs.

The courts have held that you can't terminate the person's COBRA coverage for their failure to do something unless they were informed of that duty in the COBRA notice. You'd better make sure that the requirement to give notice upon loss of dependent status was in the original COBRA notice that was given or you could be facing a very expensive lawsuit.

[Mary C]

Oriecat -We, too, have over 45,000 employees covered through about 80 different HMO's. The carriers ask for and monitor student status, we do not. The carrier have and do cancel overage dependents when they do not get satisfactory student status. Although they are supposed to notify us monthly, this does not always happen. Since we self bill, we do not reconcile who we think is covered to who the carrier thinks is covered (the carriers are supposed to do this) and have run into situations where the employee doesn't notify us until a year or more after the child loses eligiblity. In these cases, no COBRA is offered. We don't like that this happens, but it can and does despite everyone's best efforts to avoid it.

[oriecat]

Thanks for your perspective, Mary. It's nice to learn how other places operate so I can keep a wider frame of mind when reading things like this. Reading back again, it sounds like I may have misunderstood the situation. I can certainly see how not receiving an accurate listing of changes each month would be problematic when dealing with so many participants!

[jsb]

Mary C, You have precisely described how it goes for my plan. Thanks for your clarity! It's actually heartening to know we are not swimming alone in the ocean and that others face the same issues, and likely from different carriers.

Oriecat, I can re-read the earlier posts and easily come to your interpretation. And I, too, would like to have Spinky clarify the facts. Indeed, if the carrier's first notice is from the employer who got their first notice from the employee in March, 1/1 could be the retro date and no COBRA should be offered. This is noted as practice by Mary C, and is what we would do, too.