Procedures For Terminating COBRA Coverage |
By Charlie Bross
HRcertification.com
COBRA notice rules require that the plan notify QBs if COBRA coverage will be terminated earlier than the maximum period applicable to the qualifying event.
The notice of termination must contain the following information:- The reason COBRA has terminated earlier than the end of the maximum period
- The date of termination
- Any rights the QB may have under the plan or other applicable law to elect alternative or individual coverage (such as conversion coverage)
This notice must be furnished as soon as practicable following the determination that the QB is no longer entitled to COBRA.
Suggested Procedural Steps:
In cases where termination of COBRA continuation coverage is permitted for reasons other than non-payment or incomplete payment of COBRA premiums:- Immediately terminate coverage on the relevant date
- Promptly send a notice to the QB stating that his or her COBRA continuation coverage has terminated, stating the reason the coverage terminated, and stating the date on which the coverage terminated
- Code its plan's administrative system to show the QB as a "terminated" participant
If the reason for the termination of coverage is the non-payment of premiums or the payment of a premium that is short by an insignificant amount: - The employer must be sure to code its plan's administrative system to show the QB as "terminated but within grace period" until the applicable 30 day grace period expires
- As soon as the applicable 30 day period has expired, the employer should send a written notice to the QB stating that his or her COBRA continuation coverage has terminated for non-payment of premiums and stating the date on which the coverage terminated
- Code its plan's administrative system to show the QB as a "terminated" participant
Administrative Tip:
Notifying the QB can help if the employer has made an administrative error in determining that COBRA coverage has terminated, becasue it will provide the QB with an opportunity to notify the Plan Administrator, which can then correct its error before any harm is done to the QB that can cause the employer liability later.
Of course, as noted above, if the COBRA premium is short by only an "insignificant amount", the employer may not terminate COBRA continuation coverage without following the required notice procedure and providing the QB with at least 30 days to correct the deficiency.
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