Another COBRA question

Jun 27, 2008

  1. Sam
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    Sam Founder Administrator

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    If you have a small employer that has a COBRA participant on the plan, and you would like to move the group to a different carrier and the new carrier requires individual applications for underwriting:

    If the COBRA participant does not return calls and does not respond to mail or fax, is there any way to terminate them from COBRA or can they essentially hold the group hostage at the current carrier?

    This is certainly not one of the regular reasons for which you can terminate COBRA, the only thing I can think of is that if a current employee were to refuse to go through underwriting, you might have grounds to terminate them from the plan, and COBRA does allow you to terminate a COBRA participant for any reason that would warrant terminating an existing employee.

    The common example of this is to terminate for filing fraudulent claims.

    Anyone have any ideas or experience this before?
     
    Sam, Jun 27, 2008
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  2. somarco
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    somarco GA Medicare Expert

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    No first hand experience, but here is my guess . . . for what it's worth.

    I don't believe the holdout can keep the employer from changing plans. It would seem that the COBRA participant was given proper notice (by the COBRA administrator) and given an opportunity to respond. By ignoring the request they have implicitily forfeited their rights to continue on COBRA.

    Just my opinion.

    My suggestion would be to ask the COBRA administrator, and the proposed new carrier for an answer. Surely it has come up before and they can give you a definitive answer.

    The COBRA administrator, and the plan administrator (who may be the sme entity), will probably want to document their attempts to contact the wayward COBRA participant.

    You want to cover your butt as well by passing off the responsibility as much as possible and avoiding giving a definitive answer.
     
    somarco, Jun 27, 2008
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  3. Sam
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    Sam Founder Administrator

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    Bob, thanks for the advice. In fact, we are the COBRA administrator ourselves, which makes it more complicated, since we would be liable along with the firm, if this guy was terminated wrongly.

    The worst part of it is, we would love to keep him on the plan. He is young and healthy, just hates his old employer.

    According to the COBRA language, there are only a few reasons why you can terminate a COBRA participant. I don't see any specific indications that failure to respond entitles us to terminate him.
     
    Sam, Jun 27, 2008
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  4. somarco
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    somarco GA Medicare Expert

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    It was just a wag, so don't make me an unnamed co-conspirator in this case.

    Seems to me you are not terminating the employee, they are opting out in much the same way if they fail to complete a new carrier's form or pay the premium on the new plan.

    What does the prospective carrier have to say?
     
    somarco, Jun 27, 2008
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  5. Sam
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    All they say is that anyone who would be on the plan needs to go through underwriting, or else they need to be max rated.
     
    Sam, Jun 27, 2008
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  6. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    If he is young and healthy, why not suggest he go with IFP?
    Cheaper for him, solves the employer's problem.

    Win win.
     
  7. Sam
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    I would suggest that if he would only answer my calls, emails and faxes.
     
    Sam, Jun 27, 2008
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  8. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    Tried smoke signals? You've got to be creative Sam.
     
  9. LGilmore
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    LGilmore Guru

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    registered mail... spell out the options..underwriten rate or max rate option. You and his former employer have no obligation to ensure he gets the best rate possible..only that he is offered a rate.

    Make your efforts, send him the bill for the premium payment due, and as always he either pays it or doesn't.

    just keep records of attempted contacts.
     
    LGilmore, Jun 27, 2008
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  10. somarco
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    somarco GA Medicare Expert

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    Unless there is something unusual about this carrier, that would apply even if they used step rates.
     
    somarco, Jun 27, 2008
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