Under COBRA, eligible qualified beneficiaries must be offered continued health care coverage after a qualifying event. The qualified beneficiary can then select either to refuse continued coverage or to enroll in continued coverage. Sometimes, however, such a decision is not possible because the qualified beneficiary is incapacitated. When that happens, the employer must ensure that requirements for COBRA notices and election periods are still met.

How COBRA Elections Normally Work

After a qualifying event occurs, the group plan administrator (usually the employer, or employer’s designated TPA) must offer COBRA coverage to all qualified beneficiaries. For this to happen, the group plan administrator must be notified of the COBRA qualifying event.

The Department of Labor explains that sometimes the employer is responsible for this notification, and sometimes the COBRA qualified beneficiary (such as the former employee or spouse) is responsible.

• If the qualifying event is termination of employment, reduction of hours, death of the employee, the employee becoming entitled to Medicare or the employer declaring bankruptcy, then the employer has 30 days to provide notice.
• If the qualifying event is divorce, legal separation or a child’s loss of dependent status, then the covered employee or a qualified beneficiary must provide notice. The procedure for providing notification must be included in the summary plan description or COBRA general notice, and notice must be provided within 60 days of the event.

Either way, once this notice is received, the COBRA administrator has 14 days to provide a COBRA election notice to the qualifying beneficiaries. The qualifying beneficiaries must have at least 60 days to make an election decision. The 60-day period begins when the election notice is provided (measured by U.S. postmark date) or when coverage would be lost, whichever event occurs later.

Deciding whether or not to enroll is a big decision. Health care is expensive, depending on the type of plan switching coverage may require satisfaction of another deductible and even changing doctors in order to stay in network and keep out-of-pocket costs down. People who like their employer-based coverage may want to keep it.

At the same time, COBRA coverage can also be expensive, as beneficiaries may be required to pay 102 percent of the premium, which includes a 2 percent administration fee. Other options may be more affordable, but as we have discussed in earlier articles employer-based coverage is usually about one-third the cost of a comparable individual plan.

How Incapacitation Can Impact Elections

Under COBRA guidelines, qualified beneficiaries must have at least 60 days to make an election decision, and this is a very important decision that will impact their coverage and costs for the foreseeable future. If a beneficiary becomes incapacitated during this time, the ability to make this important decision is directly impacted.

A beneficiary may get into a car crash, for example, and be rendered unconscious for a period of time. It doesn’t have to be a car crash, either. It could be a skiing accident or any other injury. Alternatively, it could be another health condition, such as a stroke or heart attack.

If any of these health issues were to occur, maintaining health coverage would be more important than ever. At the same time, the health issue might prevent the beneficiary from making an election decision during the 60 days provided. It’s quite the predicament.

And while this may seem unlikely, it has happened before, and it will happen again. It could happen to one of the beneficiaries covered under your group health plan. If it does, you can look to relevant court cases on the issue to determine how to proceed.

According to HR Daily Advisor, case law on the matter has established the practice of equitable tolling, which means that the period should be paused until the beneficiary or a representative for the beneficiary has sufficient time to act.

In Branch v. G. Bernd Co., for example, the court ruled that the election period must be tolled until a representative for the incapacitated beneficiary could be appointed. As a result, the 60-day election period did not end when it was originally scheduled to.

What This Means for Employers and Plan Administrators

Under federal law, qualified beneficiaries must be notified of the election period within 14 days after the plan receives notice of the qualifying event. Then qualified beneficiaries have 60 days to make an election decision.

If the qualified beneficiaries are incapacitated, they cannot receive notice of the election period, and they cannot be expected to make a decision. Therefore, the process should be paused until the beneficiary or a representative (such as a spouse, estate or legal advisor) is in the position to act. The tolling may apply to both the COBRA election decision and the premium payment period.

Of course, you should seek the advice of your legal counsel to ensure that you act appropriately and have considered all aspects of your unique situation.

As always, do your best!

This article was reprinted from the September 2019 issue of America’s Benefit Specialist Magazine featuring our very own Robert Meyers.