New employer electing COBRA for employee
Half HR
47 Posts
A former employee elected COBRA at the last moment. The forms were sent in by the new employer, and they say they are going to pay the bill.
However, since it was the last minute, they now owe a lot of money for the last two months of coverage plus the next month. We are wary about getting stuck with the bill if they don't send payment. They have 45 days from election to send payment.
The signature on the form was also by the new employer's hand. The former employee said he would send me a letter stating that they have permission to sign for him and to manage his COBRA.
I just feel funny about this. I'm afraid we're going to get stuck paying the bill. Any advice?
Thanks,
Half HR
However, since it was the last minute, they now owe a lot of money for the last two months of coverage plus the next month. We are wary about getting stuck with the bill if they don't send payment. They have 45 days from election to send payment.
The signature on the form was also by the new employer's hand. The former employee said he would send me a letter stating that they have permission to sign for him and to manage his COBRA.
I just feel funny about this. I'm afraid we're going to get stuck paying the bill. Any advice?
Thanks,
Half HR
Comments
I would contact his new employer and notify them that you cannot process his/their request until you have received payment. Then find out, if you can, what's going on because either they don't know how COBRA works or your former employee has a medical issue. If they pay you in a timely manner, your carrier will have to honor whatever has happened.
>(This is VERY rare--if they wanted to help their
>new employee why not just provide him first day
>coverage? Something's up somewhere--the guy
>must have a major medical expense)
I don't see it as strange or rare at all. An employer, having a set waiting period for converage to take effect, cannot just willy-nilly offer first day coverage because it wants to. It's quite typical for the new employer to pay for COBRA coverage, even if it means retro-ing the payments. It's often part of the offer package.
But, even if 'something IS up', you cannot jockey COBRA around to prohibit what the new employer is proposing, and that seems to be an agreement to pick up and pay for coverage within the legally mandated election period. If there is a medical issue, the new employer will certainly inherit it soon enough.
I would let them know of the specific dates that are of concern and give them a deadline for receipt of the payments, which should always be in advance. For all you know, they are wanting to cover their ee's grace periods and if there are no claims to be paid they will simply just not send in the monthly premium payments. In our case the family coverage is a little over $1000.00 a month for premium payments for COBRA coverage. If there is no claim, why send the $2000.00 they probably would owe for back premium payments for the 1st month and the 2nd month. If you let the ee slide without premium payments, you employer just might be facing claim cost. If you hold to the "in hand premium payment schedule", you will be in safe territory, unless your company is often forgiving late payments. If so, then you must also treat this x-employee with the same conditions.
I recommend you hold the line and cancel coverage without premium payments. Failing any payment for any reason on the scheduled date is just cause for cancellation.
Been there and done that, saving the company $ollars in claims expense.
PORK
I would be very careful with this!!
1)The former EE has rights under COBRA which you must respect--- inlcluding, (s)he has 60 days from the date of canxation of her coverage, qualifying event, whichever is later, to elect COBRA coverage, and if (s)he does elect COBRA, you're required to maintain their coverage.
2) The former EE also has by law (as you note) 45 days from date of election to pay the current month's premium and any previous premiums due at that time. So you must also respect this: if the premium is paid within the required period, you must maintain their coverage.
3) While I see nothing odd about a new ER picking up COBRA premiums, It does seem odd (to me anyway) that the signatory on the COBRA election form would be the new ER???? Your former EE is the one who has COBRA rights--- their new ER does not. You might want to ask the former EE to provide a COBRA form with their own signature on it.
4) Insurance cos are also covered by COBRA! That means they must honor COBRA elections within the specified periods. Most insurance cos will also allow you to retroactively terminate an EE's coverage if they fail to pay their COBRA premiums on time. So, monetarily, this should be a non-issue for your co.
5) The new ER is not the one responsible under COBRA-- the responsible parties are your co and your former EE. If the new ER doesn't pay up, that's an issue between the new ER and your former employee, not one between you and the new ER. If the COBRA premiums are not paid, the law permits you to canx coverage retroactive to the date COBRA coverage started (and hence, you will not be stuck "holding the bag" for this).
My recommendation: Ask the EE for a COBRA election form with their own signature on it, and inform your insurance co right away of the COBRA continuation. Then, if you don't receive any COBRA payments by the due date (45 days after COBRA election, and thereafter, by postmarked by the end of the month for which premium is due) you may canx the former EE's COBRA coverage.
Isn't COBRA a gigantic pain?!
Hope this is helpful,
"hrdir03nafcu"