Cobra Termination

msoto

Last month, we terminated two employees, and offer them COBRA. Both agree to keep the benefits, with the agreement that payment would be send to us, before the 1st of the month. We receive no payment, and therefore terminated their insurance. My question is, should we mailed anything to them, letting them know that their benefits terminated? We are located in the state of california, is it mandatory by either state or federal law to notify them?

Down_the_Middle

I can't speak to CA law, but it's unclear whether you've followed fed requirements. Terminating employees have 60 days to make a decision on whether to accept COBRA continuation. Once the election is made, employees have an additional 45 days in which to make all retro payments. Thereafter, payments are generally required on a monthly basis.

Assuming the above has been satisfied, we normally send the employee a letter confirming their termination of COBRA eligibility and keep a copy in their pers file. I think this is the courteous thing to do.

bsa

I send COBRA participants a letter when their payment is overdue by 30 days, giving them another 15 days to pay up. If I don't receive payment, I send a letter of termination.

Did your people sign the COBRA form accepting continuation? Their 45 days to pay starts when they accept. If you don't have signed acceptance you must wait the 60 + 45 days. I always caution my terminating employees, that if they take advantage of the extension of time, that their payment must cover premiums for all of that time -- almost 4 months premiums at one time!!

Of course, if your insurance carrier allows, you can cancel coverage pending COBRA acceptance. IF you get acceptance, the insurance carrier will reinstate them back to the termination date.

SandiF

When an employee terminates, I take them off coverage immediately and send the COBRA election form. As mentioned, they have 60 days to decide. If they elect COBRA, they are then set up as a COBRA enrollee by the insurance company. Did these employees actually sign the application for COBRA? Also remember, (I love this one), if a terminated employee elects not to take COBRA - they've actually signed the paperwork saying they don't want it - they can change their mind any time within the 60-day period. The initial payment has to be paid within 45 days after the election of COBRA. You must give them 30 days to make each subsequent payment. If they don't pay you can cancel them and you must send them notice of cancellation. I like the idea about giving them an extra 15 days, but you must be certain that your insurance company will reimburse you retroactively for the month you paid but did not rececive payment from the employee. Our insurance company has tightened up on this. They will not accept retroactive eligibility cancellations over 30 days. They had always given us 60 until recently.