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A Service of OnQue Technologies, Inc. |
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How Does a Qualified Beneficiary
Waive COBRA Coverage? |
October 10, 2002
Santa Rosa, CA |
How does a qualified
beneficiary waive COBRA coverage?
Qualified beneficiaries can waive
their rights to continuation coverage under COBRA in two ways. The simplest,
and perhaps most common method, is a waiver by default; the qualified
beneficiary takes no affirmative action, neither waiving nor electing coverage
during the 60-day election period. The waiver of COBRA rights due to the
failure to elect coverage in a timely manner is irrevocable.
The second
method of waiver is for the qualified beneficiary to explicitly waive COBRA
rights during the election period. Such a waiver is typically made in writing,
although at least one court has upheld the validity of an oral waiver made
during an exit interview. (Note that COBRA law is silent on the issue of what
constitutes a valid waiver.)
After explicitly waiving COBRA coverage
during the election period, can a qualified beneficiary change his
mind?
Yes. A qualified beneficiary who waives COBRA continuation
coverage may revoke the waiver at any time during the 60-day election period. A
revocation of a waiver is effective on the date it is sent (postmarked or hand
delivered) to the employer or plan administrator.
Are there
drawbacks to waiving COBRA coverage?
Yes. The decision to waive COBRA
coverage may have serious consequences for the person who later changes his
mind. According to COBRA regulations, if a person who waives COBRA subsequently
revokes the waiver and elects coverage before the end of the election period,
the employer may restore coverage retroactively to the date of the revocation,
rather than to the date on which coverage was lost. In such a case, the
qualified beneficiary would experience a lapse in coverage.
Must a
COBRA waiver form be provided?
No. COBRA law and regulations are silent
on this issue. But if your policy is to restore coverage retroactively to the
waiver revocation date, rather than to the loss of coverage date, it is prudent
to provide a standard waiver form to qualified beneficiaries. This form, which
should be developed with the assistance of legal counsel, should include
specific language that explains the qualified beneficiary's rights, the
consequences of revoking a waiver, the circumstances under which a waiver may
be nullified, and other critical issues.
On the other hand, if your
standard practice is to restore coverage retroactively to the loss of coverage
date, the qualified beneficiary who revokes his waiver would not experience a
lapse in coverage. In such a case, it may not be necessary to provide a waiver
form because the only substantive waiver of COBRA rights occurs when the
qualified beneficiary fails to elect coverage during the 60-day election
period. |
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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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