Between Termination + Cobra Decision

franfields · September 2002

How do you handle the period between an employee's departure and the date by which they must decide to take Cobra?

Do you cancel their coverage and then retro it back to the term date if they choose Cobra or do you immediately put them on Cobra and then cancel retro if they waive it or fail to respond?

Terry · September 2002

I end coverage and then retro it. I do this because if they don't elect cobra and still use insurance coverage, you can be stuck for the premium. Some carriers will terminate retro if you tell them but I know that ours wouldn't go back past a usage date. And think about it, former employees have 60 days to elect Cobra and 45 days from the election date to pay you. That is a lot of time to take a risk of loosing over 3 months premium. By the way, I always inform them that election form alone will not reinstate coverage. Only when both election form and payment is received in full will the reinstatement be processed. It may seem harsh, but if they elect and then don't pay, you can still be stuck.

franfields · September 2002

If they send the election form to you, don't you have to enroll them onto Cobra as of the date they terminated. They have 45 days from the date of election to pay and, should they need medical attention after sending the form but before making a payment, couldn't you be held liable? :-?

Terry · September 2002

I actually called my state dol and they said this was ok to do. Think of it as a contract, offer + acceptance + consideration = coverage.

Lola815 · September 2002

I talked with our insurance company and asked them what they wanted me to do. They told me that if the employee knew he wanted to elect Cobra then I should leave them on. If they didn't know or said no, then the insurance company said to just take them off.

Typically an employee knows right away if they are going to want it or not, so I try to get some kind of answer out of them before they leave. If they say they do want Cobra, I tell them even though they have 60 days, they should fill out the forms and pay their premium right away to avoid any problems.

In the last six years, everyone that has ever elected Cobra has done it within the first couple of weeks.

Good luck...

NaeNae55 · September 2002

Interestingly enough, I just read an article about this. It referred to a case where the guy elected COBRA, but did not get a prescription discount during the time between termination and receipt of his 1st COBRA premium. He sued saying he should not have been taken off the plan, but he lost. Apparently the courts do not expect us to read minds, or pay an employee's premium who has an ax to grind. (I would quote it, but I already deleted it from my email.)

I used to work for a TPA. There we always terminated as if the employee was not going to take COBRA, but told any provider who called to verify coverage that the employee was still in his election period, or had elected but not yet paid the premium. When the employee paid, we made coverage retro from the date of termination (by the way, that doesn't necessarily have to be the last day of coverage, like the last day of the month, but can be from the last day of employment).

Also, the common thinking there among staff was that if you ever left an employer, and had good health, you should wait the full 60 days and then elect COBRA and then wait the full 45 days before deciding NOT to pay the premium...unless, or course, you were able to get coverage somewhere else before that. The idea was that you left your options open until you made sure you had coverage. Then if something came up before you had your other coverage, you could always go back and make up your premiums. I must admit though, that in the real world I have rarely seen it handled that way by terminating employees.

Good luck!

Marie · September 2002

We do terminate and tell anyone calling to confirm coverage that they are in the election period. We tell the employees that during the time they are inactive, they will have to resubmit any claims rejected due to no election and payment of premiums. We also tell them that if they decline the coverage before the 60 days is up and then decide before the 60th day that they do want coverage, the period when they initially declined is not covered. This keeps ex-employees from shooting themselves in the foot for a knee-jerk denial.

njjel · September 2002

We terminate their coverage effective with their termination date unless they elect COBRA coverage at the time of their exit interview. It is made clear to them at their exit interview that if they do not elect COBRA at that time that their coverage will be cancelled at the end of that month (our company policy grants coverage through the end of the current month). I haven't ever had a problem.

Between Termination + Cobra Decision

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