A recent district court case addresses termination of a qualified beneficiary’s COBRA coverage where she failed to re-enroll for such coverage during the medical plan’s open enrollment period.  In this case, the employer’s medical plan required all participants, both active and on COBRA, to re-enroll each year during open enrollment.  Detailed communications about the plan’s open enrollment requirements were sent to all active and COBRA participants in November, including a warning that coverage would terminate if a participant did not re-enroll during open enrollment and a notice setting forth the relevant enrollment dates.  Additionally, the employer sent a confirmation statement to each participant who failed to enroll during open enrollment stating that no coverage had been elected and that coverage changes could be made up until December 15.  The plaintiff was a COBRA participant and received these materials but failed to re-enroll as required.  As a result, her COBRA coverage was terminated as of December 31.

The participant sued claiming that her COBRA benefits were cut off prematurely since COBRA generally entitles a participant to continue coverage for at least 18 months.  She argued that she properly elected COBRA coverage after her termination of employment and was entitled to the full 18 months of COBRA coverage regardless of the plan’s yearly re-enrollment requirement.  The employer defended its practice stating that COBRA requires the plan to provide the same coverage to both active and COBRA participants, and because the employer could terminate an active employee’s coverage for failure to re-enroll, it could terminate coverage for a COBRA participant under the same circumstances.  The court agreed with the employer stating, that COBRA’s regulations allow a plan to terminate a COBRA participant’s coverage for the same reasons that it would terminate the coverage of an active participant because the “hallmark of CORBA is to ensure equal coverage between regular plan participants and COBRA plan participants.”  The court also recognized that an ERISA plan may establish and enforce reasonable policies to ensure orderly plan administration.

The participant also argued that she was treated unequally because some supervisors followed up with active employees to remind them to re-enroll.  The court was not persuaded by this argument either, stating that while active and COBRA participants are held to substantially similar administrative obligations under the plan, COBRA does not require employers to provide exactly the same administrative follow-up to both groups.

This case illustrates the importance of providing clear communications of plan obligations to both active and COBRA participants.  If an employer requires re-enrollment for both active and COBRA participants, care should be taken to ensure that both groups receive equal opportunities to re-enroll for coverage before COBRA coverage is terminated for COBRA qualified beneficiaries.