COBRA Help ASAP

mrsbowden · November 2003

We have an ee who went out on FMLA and quit paying his benefit premiums so we have since terminated his benefits and there is a difference of opinion of whether or not we have to offer COBRA.

To my understanding the only time we can NOT extend COBRA benefits to an eligable ee is when they are terminated for GROSS Misconduct (whatever your definition is for that)

One of my co-workers feels that b/c he was Dropped from beneifts b/c of non-payment we do not have to offer him COBRA..I disagree...WHAT IS THE LAW REGARDING THIS????

Here is the kicker...This ee went out on FMLA and then at some point filed a workmans comp claim (which we have no proof of an accident) So he is still termed as an Employee of the company!!!if we do indeed have to offer him benefits....I just found out that our TPA for COBRA did not offer him COBRA benefits 2 months ago when he should have been offered. We are now up for renewal so

Do we offer him COBRA now and give him 60 days to elect?

Do we offer him renewal, since it is now renewal and he is still considered to be an ee?

Or do we offer him nothing?

I need some expert opinions quick! Thanks again x:)

flaroyale · November 2003

I agree with you on the part about offering Cobra when his insurance was terminated. According to what I know of section 125 plans, The taking of an unpaid leave is a qualifying event to trigger Cobra paperwork if the employee or employee's dependents lose insurance due to the unpaid leave.

How long after going out on FMLA did he stop paying for insurance. Did he receive a letter from you stating his insurance would be cancelled due to lack of payment? I thought under FMLA the company is required to continue to pay their portion of benefits while the employee is out, and arrangements are made prior to or in the FMLA certification letter as to the arrangements for the employees portion.

Does someone in your company normally notify your third party provider to initiate Cobra paperwork? If it has not been to long I think I would offer the Cobra, however the employee would have to take the insurance back to the termination date if he decided to take it.

marc · November 2003

I am a bit confused with this situation. As I understand FML, the EEs health insurance benefits must continue during the leave. So terminating the health insurance appears to be a violation.

We used to have a group plan that EEs could elect to use, but pay for out of their pocket; unless they were on FML. In that case, we paid the insurance because these benefits must be continued. It does not say continued only if the EE pays, it says they must be continued.

From that perspective, Cobra does not even become an option. I think that means renewal is also not an option, but a must.

LindaS · November 2003

Regarding Marc's statement about terminating benefits on FMLA, depending on who you talk to you will get a different answer. Some will tell you it is okay and others will tell you it is a bad idea. The regulations state that the employee is to be granted a 30-day grace period for making payments and they must be provided with a 15-day advance notice of termination of benefits. In addition the employee has the right to choose HOW they are going to pay their premiums while they are on FMLA leave (they can opt to pay in advance, pay-as-you-go, or pay upon return) but the election is to be done before going out on leave.

As to the COBRA issue, yes they would qualify for COBRA as one of the qualifying events is a reduction in hours, as this would be. As far as not offering it to him timely, send the paperwork out immediately and that person would be granted another 60-day election period. The issue you have at this point is the 2 months that went by without coverage. I would recommend that, since you have the FMLA protection, reinstate him, provide him with the 15-day notice of termination of benefits and if he doesn't respond, send him the COBRA paperwork.

As an FYI - the company I represent elects NOT to terminate coverage when an employee is out on FMLA.

mrsbowden · November 2003

You are all giving me great information...I just wanted to make one added note...this EE was on FMLA for 2 months and then QUIT making benefit premium payments, this is why we opt. to terminate his CURRENT benefits and offer COBRA...the only problem is the TPA did not offer him COBRA like they should have.

LindaS now that you mention it I remembr the 30 day grace period and 15 day notice. I am going to look back into that and show it to my supervisor Thanks x:)

irenesmsaclaims · November 2003

The taking of an unpaid FML does not trigger a COBRA qualifying event. If the person doesn't pay the premium during the leave, coverage can be terminated, and if they come back, reinstated with the gap during which no benefits are available. If they don't come back a COBRA QE occurs upon such notification. The company is entitled to recover back premiums if they don't come back.

LindaS · November 2003

While the taking of unpaid FMLA leave doesn't trigger COBRA since the regs. state you have to grant the 30 day grace period for payments, if you choose to terminate someone's coverage while they are out on FMLA leave, this does trigger COBRA.

irenesmsaclaims · November 2003

No, actually what triggers COBRA is termination of employment, (or notice of intent not to return), not termination of coverage during FML. The latter is not a qualifying event under COBRA

HR in Okla · December 2003

Same song...second verse. I have a similar situation in that the employee stopped paying their portion of the insurance premium about half-way through FMLA. (I do not terminate coverage as long as they are on FMLA in anticipation that they will return and repay any back premiums through payroll, which most do.)

The FMLA ran out, I termed her, termed insurance at the end of the month, and sent a timely COBRA notice. She has now elected COBRA, but not paid.
I will not reinstate insurance until COBRA premium is paid.

Question is: What about the back premiums she also owes? Can I require they be re-paid, along with the COBRA payment before reinstating insurance?

irenesmsaclaims · December 2003

You can require the back FMLA premiums to be repaid to your company, but I would keep this separate from the COBRA bill, as they are really two issues. You wouldn't want an inadvertent violation of COBRA (premiums, billing). She is entitled to COBRA regardless of the fact of owing your company for the FMLA premiums.

LindaS · December 2003

Termination of employment OR reduction in hours are COBRA qualifying events. Reduction in hours is where FMLA would fall since at this point they are still an active employee, at least in the eyes of the insurance company and since they aren't working enough hours to qualify for full benefits.

irenesmsaclaims · December 2003

I must respectfully disagree that a reduction in hours QE occurs during a FML. FMLA has its own continuation rules, and coverage must be kept in force (with ee premium contribution) as it would be if the person were not on leave. Another kind of unpaid leave might be construed as a reduction of hours and therefore a QE, but not FMLA. Why else would they have been refining this FMLA/COBRA relationship since FMLA was passed 10 years ago? I must repeat, the taking of a FMLA leave is not a qualifying event under COBRA.

mrsbowden · December 2003

One added point...at my company this is currently handled the ee on FMLA would not be a qualifying event triggering COBRA. BUT........This ee who is on FMLA that QUIT paying benefit premiums while on FMLA is then forwarded COBRA, b/c of non-payment of benefits.

irenesmsaclaims · December 2003

Failing to pay premiums while on a FML is not a qualifying event under COBRA. You may terminate their coverage, but the QE doesn't occur until they don't return from FML, or notify you of their intent not to return. If you terminate their employment during the FML, then you have a QE.

HR in Okla · December 2003

I agree that FMLA is not a COBRA qualifying event. I didn't send a COBRA notice until the FML ran out. She used 12 weeks and is not returning to work. She returned the signed form to elect COBRA, but has not yet paid.

I am keeping the issues somewhat separate, in that I wrote a letter to her explaining that she owes her part of premiums for the time she was off.

But if she were to send the exact COBRA premium without the additional amount, could I theoretically refuse to reinstate insurance until the additional amount was paid?

irenesmsaclaims · December 2003

Even if coverage lapses during a FML, the employee must be offered COBRA at term. of employment or notification that he/she is not returning. If COBRA is elected, it must be put in force, regardless if the employee does not pay the premiums due BEFORE COBRA begins. Of course, claims would be denied during the period of lapse. Unfortunately, this is one of those times when the employer may have to eat the cost. You cannot condition COBRA by the past debt.

HR in Okla · December 2003

Thank you for that information. Others have told me you don't have to reinstate it until the payment for COBRA is paid. I will go ahead and reinstate. I doubt she'll come up with the money and I probably will never recover the back premiums, but at least I can show the boss I tried.

I appreciate your expertise. You sound like an authority on the subject.

lnelson · December 2003

Wouldn't you be able to recoup the premium if you reinstate under COBRA and after 30 days she does not pay the premium you can term her back to the original reinstatement date as long as it does not exceed 60 days. One reason for terming COBRA is non-payment of premium. I believe it is at the disgression of the insurance company I would call them to confirm.

Just a thought.
Lisa x:D

irenesmsaclaims · December 2003

It would be like any other COBRA transaction. The person has 60 days to elect; then the person has 45 days from the election to pay the premium (back to the first day of COBRA continuation). If they don't pay, then you can terminate back to the first day of COBRA, which is the first day coverage would have ended in the absence of COBRA. The 30 days to pay future premiums would be after the initial premium is paid for COBRA.

The insurance company has to follow these rules, just as you do. But be a little careful with advice; the insurance company people may not always know COBRA rules, and it is ultimately an employer responsibility. I have experienced COBRA administrators (and it's all they do) who don't know everything they should.

HR in Okla · December 2003

I agree, there are lots of people who should know that don't. My issue is not the COBRA premium, but the amount she owes from when she was on FMLA. We can and do absorb losses from people who don't pay their share when on FMLA, but I've never had one want COBRA after non-payment.

irenesmsaclaims · December 2003

I'm not sure why I didn't think of this before, but when you terminated coverage during FMLA for non-payment of ee contributions, you should be able to get a credit adjustment on your bill for this person. They won't go back forever, but they will go back for some periods of time that coverage was not in force. Try to recoup it that way. If she doesn't pay for the COBRA, you can term retroactively.

HR in Okla · December 2003

Are you thinking of the original question on this thread? I didn't terminate for non-pmt. on mine. I thought we had to keep the insurance in effect during FML whether the employee paid their part or not. I also anticipated her return and repayment through future payroll.

I'm just trying to recoup lost premiums.

irenesmsaclaims · December 2003

Oops, I'm sorry, I just re-read your part of this. You could have terminated her coverage for non-payment during FMLA, but did not. You are entitled to recover those premiums, but unfortunately the law has no teeth to allow you to do so. You may request it, making sure you don't condition her COBRA rights on it.

HR in Okla · December 2003

That's what I really needed to know...that if she pays the COBRA premium, I can't condition it on payment of the past-due amount from when she was off.

Thanks lots for your expertise.

COBRA Help ASAP

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