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A Service of OnQue Technologies, Inc. |
Questions and Answers from the COBRA Help Desk,
Part II
Frequently (and Not-So-Frequently) Asked
Questions |
March 6, 2006
By Scott Haines, President
OnQue Technologies, Inc.
Santa Rosa, CA |
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Every month
we respond to numerous COBRA questions posed by our broker and employer
customers. The questions we field cover a broad range of topics, from the
commonplace to the obscure, and our responses run the gamut as well—from
the simple and straightforward to the complex and cautionary. This tip is the
second in a series of articles in which we offer a smattering of the more
interesting and informative COBRA questions and answers:
- Employee Living in Car Arrested;
Fails to Return to Work
- Employer Believes Qualifying
Event Notice Must Be Delivered in 14 Days
- Former Spouse Claims Entitlement
to 36 Months; Broker and Carrier Disagree
- Post Office Cannot Deliver
Notice
Employee Living in Car Arrested; Fails to Return
to Work
Employer: We had an
employee who was in enrolled in our company health plan. About two weeks ago,
the police came in and arrested her for theft (not from our company) and she
was taken out in handcuffs. We have not heard from her and assume she is in
jail. We want to terminate her employment, but I don't know how to proceed.
Here are my questions:
If we terminate her employment due to gross
misconduct, is she entitled to COBRA? If so, what do I do about sending her the
COBRA notifications? The address I have on file is apparently invalid-I just
learned that she was living in her car right before her arrest. I know this
sounds weird, but it's true, and I need to know what to do.
OnQue: It is true that
COBRA need not be offered to an employee who is terminated due to gross
misconduct. However, denials of continuation coverage on such grounds have been
successfully challenged in the courts. At the heart of the matter is whether
your company has a clearly defined policy that enumerates the acts that
constitute gross misconduct, and whether you can demonstrate that the employee
was aware of that policy. Because denial of her right to continued health
coverage is a potentially dangerous matter for your company, I urge you to
consult with an attorney before taking such action.
If you process
this case as an involuntary termination of employment (not due to gross
misconduct), then you must make every reasonable attempt to deliver the COBRA
qualifying event and election notice to the former employee. According to the
law, the notice must be provided in a "good faith manner that is reasonably
calculated to ensure actual receipt of the material." In this case, acting in
"good faith" may mean sending the notice more than once. Following are a few
pointers:
- It is a mistake to assume that a
notice delivered to the former employee's last known address will not reach
her; she may be retrieving her mail from that location or perhaps it is being
forwarded to another location that is accessible to her. It would be wise to
begin by sending the notice to the address you have on file as soon as
possible.
- Contact the appropriate
authorities to determine if they can provide you with her current mailing
address.
- Ask her coworkers if they know
where she currently resides or how she receives mail if she is still
homeless.
- Protect your company (and
yourself) by carefully documenting all of your efforts to identify her place of
residence and to deliver the COBRA notice in a timely manner.
It is also good practice to send the notice via
U.S. Postal Service first-class mail with a Certificate of Mailing; the
certificate proves when and to whom the notice was mailed. For more detailed
information about COBRA notice delivery obligations and methods, see our COBRA
Tip, "Are You
Using the Safest Method to Deliver COBRA Notices?
Employer Believes Qualifying
Event Notice Must Be Delivered in 14 Days
Employer: When the employer is also the plan
administrator, how many days are allowed to provide the qualifying event
notice? Your software [COBRA OnQue] says 44 days, but I was told we have only
14 days to deliver the notice. Please explain.
OnQue: In 1995, the Department of Labor
(DOL) issued an opinion letter in which it concluded that an employer/plan
administrator has 44 days in which to notify a qualified beneficiary of his or
her rights and obligations -- 30 days as the employer plus 14 days as the plan
administrator. While most COBRA experts and courts agreed with that opinion,
some did not; at least one court ruled against an employer that failed to send
a qualifying event notice within 14 days. However, on May 26, 2004, the DOL
gave teeth to their 1995 opinion by including it in the final rules regarding
health care continuation coverage. Following is an excerpt from the DOL
publication:
Sec. 2590.606-4. Notice requirements for plan
administrators, paragraph b(2): In the case of a plan with respect to which
an employer of a covered employee is also the administrator of the plan, except
as provided in paragraph (b)(3) of this section, if the employer is otherwise
required to furnish a notice of a qualifying event to an administrator pursuant
to Sec. 2590.606-2, the administrator shall furnish to each qualified
beneficiary a notice meeting the requirements of paragraph (b)(4) of this
section not later than 44 days....
Ex-spouse Claims Entitlement
to 36 Months; Broker and Carrier Disagree
Broker: An employee left a client company
and she and her husband went on COBRA for 18 months. Three months later, she
joined her new employer's plan and her husband stayed on COBRA. In May of 2005
they divorced. At the end of August 2005, the ex-husband's 18-month COBRA
period expired. The ex-husband maintains that he is entitled to another 18
months of continuation due to the divorce. But the divorce caused no loss of
coverage - the end of the continuation period did, and therefore I feel that he
is not entitled to any additional continuation, either from the divorce or from
the end of the continuation period. The employer agrees with me, as does the
insurance carrier involved. However, the ex-husband's attorney says that he is
entitled to additional coverage. Who is right?
OnQue: Whether the former spouse
in this case is entitled to the 18-month extension depends upon the
following:
- The divorce must have occurred
before the qualified beneficiary's original 18-month coverage period expired.
That requirement appears to be satisfied in this case.
- The qualified beneficiary must
have notified the plan of the divorce within 60 days of the divorce decree
date, provided the plan properly disclosed the notice requirement to the
qualified beneficiary in its Summary Plan Description and in the initial
Qualifying Event Notice. Otherwise, the 60-day notice requirement is not
enforceable.
I assume from your description of the case that the
plan administrator did not learn of the divorce within the 60-day notice
period. If that assumption is valid and if the plan administrator can verify
that the former spouse was properly informed of the notification requirement,
then he is not entitled to the extension.
I would urge your client to
obtain legal advice before taking any action. Because the denial of COBRA
continuation coverage is a serious matter, verification that the employer has
met its disclosure obligations is critical. On the other hand, offering such
coverage when not required by law sets a dangerous precedent, because in so
doing the plan administrator is making an exception to the 60-day notification
requirement. That decision could result in an obligation to provide the same
extension of the notification period to all individuals who experience a second
qualifying event. Also, the insurers would have to agree to provide extended
coverage under such circumstances.
Post Office Cannot Deliver
Notice
Employer: What
should I do when a COBRA notice is returned marked No Mail
Receptacle?
OnQue: According to the law, the notice must
be provided in a "good faith manner that is reasonably calculated to ensure
actual receipt of the material." This means that it is very important that you
take all "reasonable" steps necessary to deliver the notice and that you
carefully document your actions.
The United States Postal Service endorsement, No
Mail Receptacle, indicates that the individual's address is correct, but he or
she failed to provide a receptacle for receipt of mail. I suggest you contact
the individual by phone to determine the best method of delivery to his or her
residence. If that fails, consider sending the notice via courier or by any
other means likely to ensure delivery of the notice. Also, consider contacting
the postal service to discuss alternative methods that ensure delivery. Again,
be sure to carefully document every action you take in your attempt to deliver
the materials. |
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| Related COBRA Tips |
| The Gross Misconduct Exception |
| Are You Using
The Safest Method To Deliver COBRA Notices? |
| Do You Provide
Terminated Employees with Adequate and Timely Benefits
Information? |
| How
Many Days Are Allowed to Provide Qualifying Event Notice — 14 or
44? |
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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Copyright © 2006
OnQue Technologies, Inc. All Rights Reserved. |
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