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Make Sure COBRA Plan Documents Specify Election Period

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The election requirements of the Consolidated Omnibus Budget Reconciliation Act (COBRA) stipulate that a qualified beneficiary must have a minimum of 60 days to elect COBRA coverage, and the election period can end no sooner than 60 days of the later of the date coverage is lost or the date that notice to the qualified beneficiary is sent.

Seems simple enough, right? One company thought so. But got tripped up by the word "minimum."


The company's plan document did not specify when the COBRA election period for the plan would end. So when a terminated employee learned that he had been denied medical coverage on the grounds that he failed to make a timely COBRA election, he filed suit. The insurer of the plan argued that when the plan document itself fails to define the end of the election period, the election period is limited to the 60-day minimum period required. Since the employee failed to elect COBRA within 60 days, he had no recourse.


He most certainly does, ruled the Fifth Circuit Court of Appeals. The court explained that COBRA's election requirements do not provide for a "default" election period of 60 days when a plan document fails to specify the maximum length of the election period. Just the opposite!


As written, COBRA merely requires a minimum election period of 60 days. Therefore, the court reasoned that if the plan document does not limit the election period, the participant can elect COBRA continuation coverage at any time within the maximum applicable statutory continuation coverage period. Since the employee elected coverage within 18 months following his termination, his election was timely. Upshot: The insurer must pay more than $250,000 in medical claims. (LifeCare Hospitals v. Health Plus of Louisiana, 5th Cir., No. 04-30422, 2005)


Double-check to make sure that all employee benefits plan documents are carefully drafted and crafted to spell out the various timetables for when an employee needs to do what. Never assume that if the document fails to stipulate a date by which an employee must take action, the minimum under the statute applies. Assuming not only makes a you-know-what out of you, but it can also result in a costly COBRA mistake.

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