COBRA Payments

CM_D

I have a Cobra employee that does not pay premiums due to a verbal arrangement made upon his termination. I am concerned that reinsurance will not pick him up in the case that he or a family member hits our excessive loss amount. Does anyone know if I should be concerned about this or what I should do to fix the problem?

AJ SPHR

Need a little more info. I don't understand the verbal arrangement for not paying COBRA premiums. Does that mean the company is paying his premiums on behalf of employee? We have done that here as part of the separation package, we pay the premiums for the employee for a specified period of time, but the coverage is still on the employee and are still listed in group contract. Not sure if this is answering your question. Not sure if I quite understand your scenario.x:-/

CM_D

The company is paying the premiums but as we are self-insured no physical check has been cut (as it would be from us to us). Do you think we need to go through the formality of cutting a check? The employee is still covered and our verbal agreement covers him for 14 months.

AJ SPHR

Even if you're self-insured, you enroll employees and dependents in the plan and communicate that to the TPA - which is what I assume you've done for this employee, notified them that this employee and dependents are covered through COBRA. I don't see any need to do anything further. The TPA doesn't care whether the employee is paying the premium or the company is absorbing the cost. So if the reinsurer needs to be called in on a claim, they'll check to see if the employee is actually covered, or rather was covered at the time of the claim, and then they take it from there.

jmcaa

What is an "eligible" employee as listed in your Plan Document?

If it states "actively at work" "full-time employee working 30 hours or more per week," then you could have a problem.

If this former employee does NOT meet the eligibility requirements of YOUR PLAN DOCUMENT, the Reinsurer may not pay.

The Reinsurer can ask for proof that this employee is employed by your company, i.e. payroll records.

I would check my Plan Document and then talk to your TPA.

CJ_2

[font size="1" color="#FF0000"]LAST EDITED ON 02-27-04 AT 01:48PM (CST)[/font][br][br]I think if it were me, I would still issue a letter to the former EE and explain in the letter that per verbal agreement with whomever, that he/she would be covered through XYZ company for a period of 14 months beginning on January 1, 2004 and terminating on February 28, 2005 (dates EE actually terminated). And remember to notate that info somewhere so that you can notify the EE that his health coverage will be terminating to allow him time to transfer his coverage without a break in coverage. Course, I may be anal too. ha