Incentive to NOT elect Cobra

dmosson

We have a self-insured group health plan. The Company pays all claims up to the stop loss amount of $100,000 per each member. I had an employee recently divorce 8/3 and I termed the spouse from the plan. The spouse is now trying to decide whether or not to continue her coverage through COBRA or enroll in her own Employer's plan. Of course, her deadline is today to enroll in her ER's plan (31 days for qualifying event), so I have an urgent situation on my hands. It is imperative that she NOT elect COBRA, however I am very much aware that she has the right to do so. We had to lay off 42 employees this year, cut costs including our Water Cooler service, cleaning service, and we're even conserving energy by turning off lights during the day, setting the air conditioner to 78 degrees, etc.

The spouse had surgery 8/6 with the medical claims now coming in, and to date, total $193,700.

Comparing the two health plans, Spouse's ER is an 80/20 with maximum out-of-pocket $3,500 not including $500 deductible. Our plan is 90/10 with maximum out-of-pocket $1,000 and deductible at $250. Easy to figure out that even if she were to elect COBRA and pay the full premium $330, she would save around $2,500. If she elects COBRA, we will be hit with the $100,000 in a matter of weeks.

My question: Can we make her an offer to her for her to take her Employer's Health insurance? We are willing to pay all medical expenses for the surgery not covered under her health plan. Tell her that if she enrolls in her ER's plan to give us an amount and we'll cut the check today. Is this legal?

Any input would be so greatly appreciated!!!!

joannie

Could you clarify something, please? You say you termed the ex-spouse's coverage on 8-3-09. Does your policy state coverage is termed immediately upon term date, or is it effective until the end of the month in which termed?

dmosson

Our plan document states that all plan coverage will terminate on the date of legal separation or divorce, so in this case she was terminated from our plan 8/3.

joannie

[My question: Can we make her an offer to her for her to take her Employer's Health insurance? We are willing to pay all medical expenses for the surgery not covered under her health plan. Tell her that if she enrolls in her ER's plan to give us an amount and we'll cut the check today. Is this legal?

Any input would be so greatly appreciated!!!![/quote]

Sorry it has taken me so long to respond, but I ran this by my COBRA compliance people. It would not be legal to offer her a monetary incentive to not elect COBRA. Federal law requires a company with more than 20 employees to offer COBRA to dependents. If you offered and she accepted and took the money, she still could come back later and sue your company for COBRA violation. I'm sorry this isn't the response you wanted to hear. Good Luck.

Sharon McKnight SPHR

[quote=dmosson;717629]We have a self-insured group health plan. The Company pays all claims up to the stop loss amount of $100,000 per each member. I had an employee recently divorce 8/3 and I termed the spouse from the plan. The spouse is now trying to decide whether or not to continue her coverage through COBRA or enroll in her own Employer's plan. Of course, her deadline is today to enroll in her ER's plan (31 days for qualifying event), so I have an urgent situation on my hands. It is imperative that she NOT elect COBRA, however I am very much aware that she has the right to do so. We had to lay off 42 employees this year, cut costs including our Water Cooler service, cleaning service, and we're even conserving energy by turning off lights during the day, setting the air conditioner to 78 degrees, etc.

The spouse had surgery 8/6 with the medical claims now coming in, and to date, total $193,700.

Comparing the two health plans, Spouse's ER is an 80/20 with maximum out-of-pocket $3,500 not including $500 deductible. Our plan is 90/10 with maximum out-of-pocket $1,000 and deductible at $250. Easy to figure out that even if she were to elect COBRA and pay the full premium $330, she would save around $2,500. If she elects COBRA, we will be hit with the $100,000 in a matter of weeks.

My question: Can we make her an offer to her for her to take her Employer's Health insurance? We are willing to pay all medical expenses for the surgery not covered under her health plan. Tell her that if she enrolls in her ER's plan to give us an amount and we'll cut the check today. Is this legal?

Any input would be so greatly appreciated!!!![/quote]


A very interesting post! Welcome to the forum. :welcome: