Yet another COBRA question ...

We have what may be a very serious situation on our hands and need sage advice from the forum participants, please!

We just learned that out of about three dozen COBRA participants with our company, a handful were never notified by our third-party plan administrator that our insurance was changing July 1. We met all our deadlines for getting the particulars to the admininstrator, including contact information for all the participants, and it appears they just dropped the ball completely.

The non-notified participants are panicking; *they* alerted us to the problem, and now they can't find out if they're still insured. Plus, their 63-day HIPAA eligibility grace period is about to expire if they *aren't* still insured. If it turns out they are (and I think they are, because they can't be terminated if they haven't been billed, can they?), they're facing the prospect of paying several months' premiums immediately.

What can we tell these employees when they call? How can we resolve this problem? One participant suggested that the administrator be forced to pay the back premiums for each person they "forgot." (I'm leaning toward that!)

And can the Department of Labor come after us? x:o

Thank you all so much for reading.

Comments

  • 11 Comments sorted by Votes Date Added
  • To answer the last question first, the Department of Labor can always 'come after you'. In reality, that's all they have to do and that's the only way for them to justify the jobs of the thousands of salaried, exempt, tenured pre-retireees they have in the building. That aside, if you are working for a self-insured company, you do have an unusual amount of control over what you cannot and can do in a crisis or in cases like the one you post. Speak with either your broker or your TPA to find out what flexibility options you have. COBRA TPAs have certain obligations but their fine print that your company signed always will state that in the final analysis, the company (you) is responsible for the legal and proper administration of the program in accordance with regulations. Don't 'flip' though. At worst, the company might have to assume the risk for a couple of months. And if you're self insured that does not equate to 'making' any premium payments.
  • If I'm reading your post properly what happened was that you changed insurance companies and the new company failed to notify the COBRA participants of where they should send their monthly payment, is this correct? If so, while I understand their frustration regarding their lack of receiving notice, I don't understand WHY you would be obligated to pay the monthly premiums. These participants knew they were required to pay the premiums so the fact that they now MAY have to pay more than one month's worth of premiums shouldn't come as a aurprise. If you are self-insured, I would contact the TPA and work out some kind of payment plan for these participants if they are unable to pay both months at once.

    Maybe I'm missing something regarding the COBRA regs. and if so, I apologize.
  • I am not aware of any obligation to bill COBRA continuees. Once they have COBRA coverage, they are expected to send the premium in on a monthly basis. If paperwork got lost in the shuffle of a change, they should still have sent in their payments. If the payment needed to be sent to a new address and they were never notified, then there would be a basis for argument or if payment were sent to the old address and returned. However, the persons receiving the coverage must keep continuous coverage (such as when they elect COBRA after 30 or 60 days, they must pay back to date of loss of coverage). There is no reason for any other entity to pay COBRA premiums. If the continuees can get back coverage then their coverage is continuous and payment is their responsibility.
  • Interesting that only a handful did not receive their notices!

    1) How long did they let this go before you were told they did not receive notices? Did you find out from the COBRA recepients?
    2) It could be that a few folks just didn't have the $ to pay the premium at the time and tried to stretch it, but then maybe not.
    3) Make sure the COBRA notices get to these folks ASAP, send them certified!
    4) They are still within the 60 days limitation, so get the notice out right now.
    5) Contact your TPA and instruct them to accept all payments as 'on time' through, say, September 5 (giving your COBRA people time to get the two months premium together).

    6) Yes, these folks knew they had premiums coming to pay,so paying two months shouldn't surprise them.

    Depending on how soon they now get their notices, they should be able to get their payment in within the next two weeks. And if you have a TPA, you have some authority as to whether or not you will accept a late payment, and in this instance - you will. But, set a deadline and be firm.


    I would also send a letter to the Mgr of your TPA, informing him/her of this problem, and what you expect to be done to remedy the problem.
  • Correction!

    Were these folks already on COBRA? If so, then when the insurance changed, they should have received their checks back with a letter from the previous carrier. This in turn should have triggered them to call you or a HR rep.

    Why did they wait so long before asking questions?

    If you have a TPA, you have some authority over them, and can instruct them to accept a late payment (for July/August) up to, say, Sept. 5. Send a letter(certified)out to your COBRA recipients instructing them where to send their payment and be clear that they need to bring themselves current, and that benefits will not be paid for months not made current. Instruct them that premiums must be made on time or coverage will be canceled, and be firm on your deadline.
  • [font size="1" color="#FF0000"]LAST EDITED ON 08-25-03 AT 10:31PM (CST)[/font][p]
  • If the participants didn't get a bill, they should have called immediately and found out what was going on. They should have gone ahead and sent their premiums in, and if they didn't know where to send it, they still should have set the funds aside. I see no reason to make allowances for the participants having to come up with more than one month's premium now. In truth, the law does not actually require you to 'bill' participants for their COBRA premium. However, if you have been billing them (and it sounds like you have) then a court might be more likely to find in their favor if they sue because they lost coverage.


    Having said all that, I feel I should point out that you know that your TPA made a mistake and dropped the ball here. Someone from the TPA should talk to the carrier and "schmooze" them into agreeing that this is a clerical error and all your COBRA participants should be able to continue their insurance. If the carrier doesn't agree, then you need to ask yourself why you are doing business with them. I would also see many lawsuits and counter-lawsuits in your future.

    Get the TPA to throw themselves on the mercy of the carrier and get those partipants insurance. That is the best way to avoid a lawsuit. But make the participants pay for their own insurance. After all, they are not doing you a favor by giving you the business so have no reason to expect extra perks because of a mistake. All they should expect is for you to make the outcome the same as if they always had insurance.

    Good luck!
  • Thank you all so much for your responses so far! It's obvious that in my attempt at brevity, I sacrificed clarity. x;-)

    So, to explain:

    >Were these folks already on COBRA? If so, then when the insurance
    >changed, they should have received their checks back with a letter
    >from the previous carrier. This in turn should have triggered them to
    >call you or a HR rep.
    >
    >Why did they wait so long before asking questions?
    >
    They were indeed already on COBRA and had been paying their premiums directly to the insurance provider. (The provider was serving as COBRA administrator.) When we changed TPAs, the ee's were supposed to be timely notified. We now know that these were not. In fact, they'd all received premium notices from the former administrator for the month of July and had already paid their premiums in advance for that month. The former administrator then sent them letters mid-month informing them that they no longer had coverage after July 30 because a new TPA had been chosen. And BOY did the phones start ringing here! (The former administrator said it would refund the premiums within 45 days. That hasn't happened yet. xx( ) We told the ee's to call the new TPA to find out what was going on.

    The TPA told these ee's that all their information had been mailed earlier. The ee's kept watching their mailboxes and calling and trying to find out what was happening, and they kept being told that the information "had been sent," "was about to be sent," "was going to be sent in a couple of days," ad nauseum. Because they were talking directly to the TPA and not to us, we didn't know until last week that the problem hadn't been resolved. That's when three of the ee's informed us and the TPA that they were about to call the DOL. And that's when these folks *finally* started getting their plan information and finding out that they had to choose different plans, etc.

    All but a couple of the affected ee's have been tracking this since they got their first termination letter in mid-July. And I think their suggestion about making the TPA (and ultimately, us) pay the late premiums is more punitive than legally justified, but I understand where it's coming from.

    >In truth, the law does not actually require you
    > to 'bill' participants for their COBRA premium.

    You're right, but it does require us to tell them (or make sure our TPA tells them) where they're supposed to *send* their COBRA premiums. And that's what appears to have happened here. They sent their premiums to the old administrator and were not timely notified that they need to send them to the new one, or even that there *was* one. xx(

    >All they should expect is for you to make
    > the outcome the same as if they always had insurance.

    Yes. That's what we intend to do.

    Again, thank you all for your advice!
  • This is precisely the reason that I handle all COBRA notices and collect the money myself and don't depend on a carrier or TPA to do it for me. The law says the employer is ultimately responsible. DOL doesn't care if a TPA screws up. There is definitely a risk in hiring someone to do this for you.
  • While I will not disagree with what you said Mentel (is that pronounce Mental like, mental illness? x}> ) it may not be practical with much larger employers. I know that I get cc'd on the COBRA letter that is sent out to the former employee.
    My $0.02 worth,
    DJ The Balloonman
  • Awright Balloonman! Don't you go wise crackin' about the name. She's been a very well behaved participant for a long time and don't need you riling her up. There are quite enough of us who cannot behave.
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