COBRA Cancelled

[coleboy]

We are a TPA firm who does some COBRA administration. Received a call from a distraught person because his COBRA was stopped due to non-payment. He sent a partial payment to cover May then sent nothing for June & July. He was then notified that coverage was stopped due to lack of payments. His argument was that he never received any payment coupons nor did he receive any "warnings" that coverage was going to end.

 He had signed off on all of the initial COBRA paperwork which stated the costs, payment of premiums, etc.

My question is whether he has any push back.

Thanks!

[Luke Bailey]

Your initial COBRA notice must explain the premium payment requirements. For a missed payment there is a 30-day grace period, but no notice requirement to alert the COBRA continue that you did not get their payment timely within that period.

The above is, you know, just "generally speaking."

[Catherine Zilka]

No.  You are not required to send payment coupons, or late payment notices.  However, if you do this for all other COBRA participants, then you must do the same for this PQB.  The Initial COBRA notices received as a new hire explains this as well as your COBRA notification/election packet should state this.

Per the DOL:  The plan is not obligated to send monthly premium notices, but is required to provide a notice of early termination if continuation coverage is terminated early due to failure to make a timely payment.

[Luke Bailey]

3 hours ago, Catherine Zilka said:

However, if you do this for all other COBRA participants, then you must do the same for this PQB. 

Good point about having to treat all QB's the same way, but in my experience most COBRA outsourcing companies do the bare minimum, i.e., nothing more than what the law requires. Usually, the contract between the employer and the COBRA outsourcing company compensates the COBRA outsourcing company based on the size of the active plan, not the number of COBRA continuees, so there is no incentive to maximize the number of COBRA continuees or the duration of their coverage.

In a self-insured plan, at least, the employer may have some discretion, although limited, to modify the outcome in favor of the QB if the facts and circumstances warrant, such as a justifiable mistake of fact. Even in a self-insured plan, however, I would not exercise discretion without first getting approval from stop loss carrier.