RETROACTIVE PREMIUM DEMAND NOT COBRA VIOLATION
A California federal court ruled that the administrator of the employer’s health plan acted properly when it required a former employee to pay premiums retroactive to his termination and then ended his coverage when he failed to make timely future payments, the U.S. District Court for the Northern District of California rules.
Although the administrator violated COBRA by not giving the participant proper notice of his right to continued health insurance, the court found the administrator complied with COBRA when it retroactively enrolled the employee in the plan seven months after he first became eligible for continued coverage.
The court further found that the administrator acted within its authority by charging the participant retroactive premiums for the seven months that he lacked COBRA coverage.
The court wrote, "Nothing in COBRA permits a former employee to commence COBRA continuation coverage seven months after the qualifying event," it adds, dismissing the employee’s contention that the lump-sum payment he made to cover his retroactive premiums should have been applied to future months.
COBRA regulations require notice be provided to the eligible individual within 44 days of the date of the qualifying event. The individual then as up to 60 days to elect COBRA, and 45 days to make the initial premium payment, measured from the date of election. Subsequent premium payments are due on the due date, with a 30-day grace period. Failure to make premium payments in a “timely” manner may result in cancellation of COBRA coverage with no possibility of reinstatement.
If COBRA coverage is terminated prior to the end of the maximum coverage period, the plan administrator is required to provide the individual(s) with a COBRA notice of early termination.
Chaganti v. Sun Microsystems, N.D. Cal., No. C 03-05785 CRB, "unpublished "11/23/04.
©2007 CobraAid
CobraAid is not engaged in the rendering of legal advice. This article should not be considered legal advice. The information contained in this article is subject to change and should be used for information purposes only. If legal advice is needed, seek competent counsel.
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