Employer and/or plan administrator obligations regarding COBRA.

February 5, 2010 1:39 PM

Does your employer and/or plan administrator have any obligation to notify you of the option to elect COBRA insurance coverage when you quit a job where you were receiving health insurance?

I quit my job late last year (last day was August 31st). I was receiving health insurance through the company's group policy for myself, my spouse, and my child. I paid most of the premium via an automatic deduction from my regular paycheck. The employer paid some of the cost for my insurance.

After the 31st, I assumed that since I was no longer working there, I was of course no longer eligible for receive health insurance through the company's group policy. I was no longer receiving a paycheck, so I was no longer paying anything towards the policy.

We have not been able to go to the doctor since, but we haven't needed to. No one is on any regular medication or anything. However, we do need to get insurance somehow. I have been freelancing, and don't have a solution yet. (Maybe I should be asking about that.)

Just recently, I was contacted by both my employer and someone who I later found is the "plan administrator". They were "requiring" that I send them "proof of other insurance" in order to cancel my health insurance plan.

I didn't understand why this was an issue nearly six months later, assuming the plan had been canceled long ago. They explained that they were trying to cancel the plan now, but effective August 31st of last year (my last day), in order to not pay fees.

I didn't understand why they needed me to be involved in the company canceling the plan, since I was no longer paying, why would it be up to me. I was looking into it and found out about something called COBRA.

Apparently, when you quit a job that provides health insurance, the government provides a way to extend the same health insurance coverage you had been receiving. Of course, you have to pay the full premium cost, if your employer was making any contribution.

So I contacted the plan administrator to see if it was possible for me to get onto COBRA since they are canceling my policy. She contacted the employer and they say they will not allow me to enroll in COBRA because you have 60 days from when you quit in order to enroll and it is now well outside of that 60 day window.

My question is if the employer and/or the "plan administrator" had any duty to inform me of the COBRA possibility before this 60 days is up. From what I've read online, it seems to say that the plan administrator should have sent me forms to elect COBRA within 14 days of the policy being canceled. However, it doesn't say what happens if they don't. Also, I'm not sure this applies anyway, since technically they didn't even cancel it yet.

posted by doomtop to law & government (16 answers total)

My question is if the employer and/or the "plan administrator" had any duty to inform me of the COBRA possibility before this 60 days is up.

YES YES YES

Huge lawsuits because of stuff like this.
posted by yoyoceramic at 2:02 PM on February 5, 2010 [1 favorite]

IAAL, but I am Not Your Lawyer. You need to contact a lawyer.
posted by dpx.mfx at 2:02 PM on February 5, 2010

If they are only canceling your policy now, I don't see how it's been 60 days since they canceled your policy. I would call the COBRA hotline: [phone]-EBSA (3272)
Vermont also has a Health insurance questions hotline
I would also look in to getting a lawyer. It sounds like they seriously messed up.
posted by amethysts at 2:10 PM on February 5, 2010

An Employer's Guide to Health Continuation Coverage Under COBRA - The Consolidated Omnibus Budget Reconciliation Act
posted by jckll at 2:12 PM on February 5, 2010

Is this really that serious? I'm not sure I would want to be involved in a lawsuit. I was just looking to keep the health insurance going, just in case something did happen.

@amethysts: That's the catch. It hasn't been 60 days since they canceled my policy. (In fact, I don't think they have canceled it yet.) But what they are saying is "the law states that there is a 60 day period for an employee to elect COBRA after the last month they were employed."
posted by doomtop at 2:19 PM on February 5, 2010

Definitely contact your state's COBRA hotline and a labor lawyer - depending on the size of yr ex-employer there are sizable penalties that are levied against yr employer per day that are in yr favor.
posted by kittyloop at 2:20 PM on February 5, 2010

My question is if the employer and/or the "plan administrator" had any duty to inform me of the COBRA possibility before this 60 days is up.

Yes they did. I live in Vermont. This is potentially a big problem and your employer is potentially in big trouble. I have stopped a job [contract term expired] and I got very very official forms about COBRA. You should have too. Call the question line. They'll be nice and helpful. If you're lucky you may just be able to work out some sort of retroactive deal to get on health insurance. There's a good chance they have been paying your premiums and just noticed that you're not eligible to have them pay them and so they want to retroactively cancel and get back what they've paid. Unfortunately this highlights the fact that you were not told about COBRA.

So, yeah, call and get questions answered. You may be able to work this out amicably but be prepared with dates/times/information like this

xx August - left job
xx August - employer paid out extra vacation
xx January - employer sent email saying "we want to cancel your health insurance"

etc.
posted by jessamyn at 2:27 PM on February 5, 2010

there was a very serious problem somewhere along the line. they are required by federal law to notify you of cobra within X days of you leaving your job. the fact that they did not do this is a HUGE problem, a big no-no, and if you wanted to, could get them in serious hot water.

you are entitled to cobra coverage and the fact that they didn't tell you about it is seriously lame.

the fact that they didn't cancel your policy the second you were out the door is also really suspect because usually companies are on top of that because it costs them lots of money they don't want to spend on someone they don't even employ anymore.

so, if they want proof of other coverage, tell them you don't have it. because you don't. because you were never given cobra information. and now it's their problem to cancel your policy because they didn't to their fucking job when they should have.

as for cobra, it's normally a waste of money in my opinion, but right now it's subsidized because of the economy and whatnot. so you really should call the cobra hotline and see what can be done about getting on it if you want to.
posted by misanthropicsarah at 2:29 PM on February 5, 2010

Oh and I guess I should explain the rest of my story. I had a job with insurance which ended. I got a letter about COBRA. It was expensive so I hustled around to find other insurance [I wound up going with VHAP, you might be able to also]. I had to sign something very specifically that said I understood what my rights were w/r/t COBRA.

I was told by the accountant at my job that if I did not pay the premium for COBRA [the weird thing is that you have to write a check for the full amount of the insurance to your old job to pay for your insurance which is still the group insurance you had at work...] they would cancel my insurance. So when I found VHAP I figured "fuck em [was not the best job...] let them cancel me" Then I got a registered letter from my former job asking for the full premium amount for my health insurance for the following month. I said "you told me you'd cancel me if I didn't pay. I didn't pay. Cancel me like you said..."

And then it came out that what the accountant said was wrong, they'd paid my premium when I didn't pay it, as your job probably did, and they were pissed and wanted me to pay them back. That started a long back and forth about who said what to whom and at the end of it because I did have insurance, my job got their premium payment back for the month they paid for me when I already had insurance. So, my guess is that is exactly what is going on at your former workplace. When you tell them you don't have insurance, they're going to be on the hook for the payments and for you not learning about COBRA. As other people have said, this is a federal law and it's an important one, so I'd try to work this out in some amicable fashion but in a way that makes it clear that they didnt' do what they were supposed to.
posted by jessamyn at 2:36 PM on February 5, 2010

First off, yes absolutely they are definitely required to give you notice.

Secondly, as far as your options now, according to jckill's link to the Department of Labor guide:

"At a minimum, each qualified beneficiary must be given at least 60 days to choose whether or not to elect COBRA coverage, beginning from the later of the date the election notice is provided, or the date on which the qualified beneficiary would otherwise lose coverage under the group health plan due to the qualifying event."

So that seems to suggest that, since they haven't given you any election notice yet, you should be able to elect coverage now.
posted by EmilyClimbs at 4:40 PM on February 5, 2010

It hasn't been mentioned yet, but not all employers are subject to COBRA requirements to offer continued health insurance coverage. If the employer has fewer than 20 employees (although it's not quite that simple), or if it is a church or church-related organization, or a federal government plan(!), COBRA doesn't apply.

Assuming COBRA does cover your ex-employer: If you want to continue your insurance, and the plan didn't provide the required notice to you of your rights to continue, give them a chance to right the wrong. You quoted them as saying "the law states that there is a 60 day period for an employee to elect COBRA after the last month they were employed", but what the law requires is that they give you 60 days to decide after they provide you with notice of your rights to continuation coverage. That notice can't be given until after your eligibility ends.

My guess at the situation is the same as Jessamyn's: your ex-employer failed to notify the plan of your termination, and continued to pay the premiums for several months. They realized their error recently and are now trying to get their premiums returned by the plan. You have not had any claims during that time, but the insurance plan may be refusing to refund premiums to the employer without proof that you had other insurance coverage.
posted by Snerd at 6:35 PM on February 5, 2010

Does the company have more than 50 employees? If not, they are not required to offer COBRA.
posted by hworth at 7:29 PM on February 5, 2010

@hworth: Where are you getting this information? I have seen the 20 employees mentioned, but never 50.

Also, if the company does have less than 20 employees, but has offered COBRA to others in the past, can they select to deny me because of this situation (which, in my opinion, is not my fault)?
posted by doomtop at 7:14 AM on February 6, 2010

Also, if the company does have less than 20 employees, but has offered COBRA to others in the past, can they select to deny me because of this situation (which, in my opinion, is not my fault)?

If they have less than 20 employees, COBRA does not require them to offer continuation coverage to you. Seems unlikely you could make a legal case for discrimination (they have provided continuation coverage to others) unless you were a member of a protected class. IANAL but a legal fight on this without COBRA on your side would be very expensive and probably futile. Since the company hasn't denied that COBRA applies, but has only incorrectly stated that your deadline to elect continuation coverage has passed, your best bet may be to politely work toward a "late" COBRA election. In that case, your company will almost certainly require you to cough up the full premium cost since August 31.
posted by Snerd at 8:31 AM on February 6, 2010

If the company does have less than 20 employees then you should see if you're covered by state continuation coverage. Looks like Vermont's state insurance department website has a lot of dead links but this might be helpful: http://www.bishca.state.vt.us/sites/default/files/ContofCoverage_employers_9-10-09.pdf
posted by EmilyClimbs at 7:54 AM on February 7, 2010

I want to underscore the fact that there IS OFTEN coverage requirements for companies with less than 20 employees - this is often referred to as "mini COBRA" and is (was?) in the jurisdiction of the state.

Now here is something to research further: I was told that one of the recent (past 2 years) recovery bills provide federal subsidization for mini-COBRA thus extending coverage to all victims of small firm lay-offs nationwide. Do not know the details or if this is still in effect, but very important.

Also important - clarify the duration of your coverage. This varies state by state.
posted by keasby at 7:30 PM on August 17, 2010