Insurance Agent Forum

[Melmunch3]

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?

[somarco]

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.

[Melmunch3]

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.

[somarco]

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?

[Melmunch3]

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.

[moonlightandmargaritas]

Originally Posted by Melmunch3

He is young and healthy, just hates his old employer.

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

Win win.

[Melmunch3]

I would suggest that if he would only answer my calls, emails and faxes.

[moonlightandmargaritas]

Originally Posted by Melmunch3

I would suggest that if he would only answer my calls, emails and faxes.

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

[LGilmore]

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.

[Melmunch3]

The problem is that the new carrier has blended rates, and the max rate up would apply for everyone.

[somarco]

max rate up would apply for everyone

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

[LGilmore]

"The problem is that the new carrier has blended rates, and the max rate up would apply for everyone."

Is that something you would normally explain to a cobra continuant? How many months does he have left?

Send him the stuff ahead of time, you'll either get the paperwork or the new higher premium. If he sends the check, send him back the difference and make the move later. If he sends the app, get everything else going. In other words get his app first rather than last.

Are you counting on him to reduce the group rate?

[ABC]

I would contact the Cobra administrator and ask them the laws regarding this situation.

If there client is admistering Cobra themselves this could be a very sticky situation.

Assume nothing

[bluemarlin08]

My bet is the former employee is not required to do anything except pay the premium, even though the rate might increase.
As I read your post, the whole group is going to be impacted negatively with higher than normal rates if they switch if this guy doesn't complete a new app, is that a fair understanding?
The group might just be stuck with the current carrier until this guy drops off COBRA. I would think you are on shaky ground if you put his COBRA in jeoprady.

[LGilmore]

You can change plans and have someone on cobra, done it many times. Usually it's just notifying the change and the cost. Cobra does not REQUIRE an employer to stay in a plan for 18 months, it requires an employer to offer coverage for that time period. Change does not have to be cheaper.

I am wondering if the plan is having the younger cobra person helps the group rate go down? If that is the case be careful anyway because the final rates might change as most plans will take into consideration how much time a cobra has left with the company. They can adjust the final rate if they see that cobra continuant dropping off in a few months.

Just send the stuff registered mail and change the billing. Talk to underwriting and let them know. I've had adjustments made for special situations, ask.

[Mr. Bill]

If someone's affiliated with cobrahelp.com, maybe the question can be posed there?