FOCUS: Employee Benefits and ERISA
Securing Coverage after Cobra Violation
Following termination of employment, a client was notified that, due to failure to make his initial COBRA premium payment, his continuation of health coverage had been denied.
The client sought GCT’s help to reinstate his coverage. He informed us that although there were insufficient funds in his bank account on the due date, funds were available later in the month. GCT drafted a letter to the ex-employer as “plan administrator” to appeal the denial of coverage, in accordance with the applicable ERISA claims procedure. The letter (1) contended that the employer had a fiduciary duty to comply with the 30-day grace period, and have its COBRA service provider access our client’s account later in the month so his premium payment could be made, and (2) referenced the applicable Department of Labor regulations and requested provision of all “relevant information” concerning the decision to deny.
While the client had failed to pay the required premiums on the due date, the former employer had an obligation to honor the 30-day grace period—and allow attempts for payment to be collected at any point during that period. Ultimately, our client’s coverage was resumed without lapse.