Q.- An employee was eligible for coverage under our health plan August 1. She terminated employment July 31 prior to her effective date of benefits. We enrolled her effective August 1, even though she should not have been enrolled. We can only terminate her coverage effective September 1. Does she have to be offered the right to continue her coverage under COBRA, even if she should never have been covered in the first place?
A.- The conservative approach would be to offer the individual COBRA coverage. Under the COBRA rules, each qualified beneficiary who loses group health plan coverage as the result of a qualifying event must be given the opportunity to elect COBRA coverage. A qualified beneficiary includes a covered employee if on the day before the qualifying event, he or she is covered under the plan.
We know of at least one court case where it was found that the definition of covered employee included an employee who was not eligible for coverage under the plan but was wrongly covered by the plan anyway. In that case, the court said that the termination of employment could be considered a COBRA qualifying event.
