COBRA Election Form Dilemma

[Christine Roberts]

This question relates specifically to COBRA third party administrators (TPAs).

Typically a COBRA TPA will send out a COBRA qualifying event notice and election form package using its own proprietary COBRA election form. The proprietary form will permit the qualified beneficiary to elect COBRA coverage under all types of group health coverage the employer offers, including for instance dental as well as group health.

The problem is that the individual insurance carriers are insisting on timely completion of their own COBRA election forms, and are denying COBRA coverage where, for instance, the qualified beneficiary timely elected COBRA using the TPA's "omnibus" election form, but failed separately to complete and send back the Delta dental election form. Usually the carriers' separate COBRA election form contain self-protective language such as an arbitration agreements, and this self-protective language is the primary feature that sets the carrier's form apart from the TPA's "omnibus" COBRA election form.

Keep in mind, the TPA's omnibus election form contains all information required by COBRA regulation to make a timely and informed election, and also permits election of all coverages subject to COBRA. So, in the qualified beneficiary's mind, he or she checked off "Dental" coverage as part of their COBRA election, and understandably are confused when Delta refuses coverage for lack of a timely completed, separate COBRA election form.

The question is, can the carrier legitimately deny COBRA coverage to a participant who timely elected COBRA coverage under the carrier's policy, using the "omnibus" TPA election form, but did not sign off on the proprietary election form, where the "omnibus" election form contains all information required under ERISA to make a timely COBRA election?

Put another way, can a carrier condition COBRA coverage on a participants' signature on arbitration provisions or other non-COBRA language?

Comments are appreciated.

[Jacmo]

Seems to me that both the carrier and the TPA work for the employer. If one or the other is being obstinate, it's time to change vendors. Can Delta Dental afford to lose this account over this matter? How do they justify their position?

A carrier can require whatever they think meets their needs to properly administer COBRA. The question is--does that position stand up in the marketplace?

Can the TPA not add the arbitration language to their notice?

It looks like everyone is protecting their own interest and the employer is trapped in the middle.

[Guest DRIVEN]

This question relates specifically to COBRA third party administrators (TPAs).

Typically a COBRA TPA will send out a COBRA qualifying event notice and election form package using its own proprietary COBRA election form. The proprietary form will permit the qualified beneficiary to elect COBRA coverage under all types of group health coverage the employer offers, including for instance dental as well as group health.

The problem is that the individual insurance carriers are insisting on timely completion of their own COBRA election forms, and are denying COBRA coverage where, for instance, the qualified beneficiary timely elected COBRA using the TPA's "omnibus" election form, but failed separately to complete and send back the Delta dental election form. Usually the carriers' separate COBRA election form contain self-protective language such as an arbitration agreements, and this self-protective language is the primary feature that sets the carrier's form apart from the TPA's "omnibus" COBRA election form.

Keep in mind, the TPA's omnibus election form contains all information required by COBRA regulation to make a timely and informed election, and also permits election of all coverages subject to COBRA. So, in the qualified beneficiary's mind, he or she checked off "Dental" coverage as part of their COBRA election, and understandably are confused when Delta refuses coverage for lack of a timely completed, separate COBRA election form.

The question is, can the carrier legitimately deny COBRA coverage to a participant who timely elected COBRA coverage under the carrier's policy, using the "omnibus" TPA election form, but did not sign off on the proprietary election form, where the "omnibus" election form contains all information required under ERISA to make a timely COBRA election?

Put another way, can a carrier condition COBRA coverage on a participants' signature on arbitration provisions or other non-COBRA language?

Comments are appreciated.

The answer is no. A carrier cannot REQUIRE a signed election form for coverage. If a person sends in just a payment, that is considered an election and they cannot deny them benefits. Besides, they already have pretty much all of the information they need on that person. If they give you a hard time, you could try supplying them with a copy of a signed election form that they returned to the TPA. But then, ask your carrier what they expect you to do if a participant sends a check without an election form since that is considered an election under Federal guidelines.

[Guest DRIVEN]

Here is a little bit of information that should help you:

During an informal conversation with the Department of Labor, their representative stated that a carrier

cannot deny coverage based upon not receiving a signed election form or application.

The COBRA law does not require an election of COBRA coverage only be accepted based upon a signature. In fact, it does not require an election form in all cases. Please consider the following cases where the qualified beneficiary does not provide an election form:

• Verbal Election

• Constructive Election (as specifically allowed in the COBRA Regulations)

• Premium Payment as Election (no election received, a check for the appropriate payment is received indicating election and payment)

According to TAMRA (the Technical and Miscellaneous Revenue Act of l988) which amended COBRA, carriers can be enjoined as liable parties if they do not allow reinstatement of coverage under COBRA when:

1. They provide coverage to similarly situated active employees.

2. A written request for COBRA coverage is submitted.

[Christine Roberts]

Thank you.

I so happens that this issue came up for a client recently, again, so I appreciate the additional input.

Here is a little bit of information that should help you:

During an informal conversation with the Department of Labor, their representative stated that a carrier

cannot deny coverage based upon not receiving a signed election form or application.

The COBRA law does not require an election of COBRA coverage only be accepted based upon a signature. In fact, it does not require an election form in all cases. Please consider the following cases where the qualified beneficiary does not provide an election form:

• Verbal Election

• Constructive Election (as specifically allowed in the COBRA Regulations)

• Premium Payment as Election (no election received, a check for the appropriate payment is received indicating election and payment)

According to TAMRA (the Technical and Miscellaneous Revenue Act of l988) which amended COBRA, carriers can be enjoined as liable parties if they do not allow reinstatement of coverage under COBRA when:

1. They provide coverage to similarly situated active employees.

2. A written request for COBRA coverage is submitted.