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COBRA SNAFU
August 17, 2010 6:46 PM   Subscribe

What to do regarding COBRA coverage being canceled due to negligence of former employer?

Husband was laid-off from his job of 20 years in October 2009. He hand-delivered a check every month for COBRA coverage. We have copies of the canceled checks. The last one was for March because coverage at his new job started April 1, 2010.

In the middle of March, I had to take our baby to the ER because of an allergic reaction to a medication. We received an explanation of benefits last week denying the claim because the COBRA policy was canceled on 2/28 instead of 3/31.

Husband went around and around with the idiots at the company and they agreed to refund the COBRA payment for March. So, now we're responsible for this big ER bill because the HR idiot didn't do her job.

The other problem is Husband is starting another new job in September. We're afraid the month lapse is going to affect our creditable coverage since we won't have had a year on the new insurance. For what it's worth, we have letters from the insurance company stating that the policy ended on 3/31. Not sure why they say that, but they do. Their website has the 2/28 date on it.

Is it too late to pay for that month of COBRA without going through the company? Is this going to affect our creditable coverage for the job Husband will be starting in September?
posted by moosedogtoo to Work & Money (9 answers total)
 
Generally speaking, group policies aren't impacted by a lapse in coverage. So, for that at least, you can almost certainly put your mind to rest. Do call the HR department to verify that it won't be a problem. Sorry I can't help more with the COBRA stuff. You might want to post what insurance company your COBRA payments are going to.
posted by stoneweaver at 6:51 PM on August 17, 2010


Is it too late to pay for that month of COBRA without going through the company?
Yes. You typically have a 30 day grace period to make payments, and this grace period expired April 1, 2010. Since you accepted a refund of your March payment and agreed to cancel the coverage 2/28/10, you cannot retroactively elect COBRA coverage for March at this point.

Is this going to affect our creditable coverage for the job Husband will be starting in September?
No. Per HIPAA, you have to have had a lapse of 63 or more days in coverage before you can be subject to this exclusion. This will not apply to you.

Really, your biggest problem now is the big ER bill. The pre-ex will not be an issue. Why was the policy canceled in error? That's still not clear. If the company cashed your COBRA check for March, why didn't you insist that the cancellation date be corrected? Maybe you or your husband did do this, and I'm just misunderstanding - if so, I'm sorry. I'm just not sure why you accepted a refund of premium instead of demanding (rightfully so) that the cancellation date be fixed. If you accepted a refund and agreed that the coverage should be cancelled 2/28/10, I'm not sure you have any remedy, but IANAL.
posted by pecanpies at 6:59 PM on August 17, 2010 [1 favorite]


You need some bureaucrats with extensive knowledge of the insurance laws in your state. There will be an Insurance Commission or Bureau in state government. They should be able to give you accurate information.

Your ex-company is being bad, and you may wish to contact a lawyer. But talk to the State Insurance Weenies 1st.
posted by theora55 at 7:13 PM on August 17, 2010


Also, just wanted to chime back in to say I didn't mean to sound as though I was merely asking a bunch of rhetorical questions - I just wanted to see if there might be more to the story.
posted by pecanpies at 7:22 PM on August 17, 2010


You need to contact the DOL.

http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.HTML
posted by hal_c_on at 8:41 PM on August 17, 2010


I agree with pecanpies. There shouldn't be a worry about pre-existing conditions because the gap in coverage wasn't long enough.

Also, you don't say how much the ER bill was compared to a month of COBRA coverage. If it's less (and you're sure you've seen all the bills), there's not much reason not to pay it. You're losing out on the discount the insurance company negotiated, but it's going to be a pain to get the former employer to reinstate you retroactively for that one month, especially after accepting the refunded month of premium.
posted by MarkAnd at 7:13 AM on August 18, 2010


Why was the policy canceled in error?
The HR person never forwarded our money on to the insurance company.

If the company cashed your COBRA check for March, why didn't you insist that the cancellation date be corrected?
We requested this and the HR person and her boss refused.

Our main worry was the time of the lapse in coverage, so with the 63 day grace period, we are fine there. The other problem was the ER bill, which we can afford, but it just pissed me off that we never knew the policy was canceled until we got this huge bill in the mail. After 20 years of loyalty to this company, we expected a little better, but loyalty gets you nowhere we've figured out. Thanks for everyone's help on this! :)
posted by moosedogtoo at 7:41 AM on August 18, 2010


If it was your insurer paying the ER bill, they wouldn't be paying anywhere near full price. Talk to the hospital billing department about a reduction. Many hospitals have an 'uninsured discount' or will knock things down to Usual, Customary, and Reasonable (UCR, it's a recognized industry term) if you ask.
posted by expialidocious at 8:03 AM on August 18, 2010


OK, I see what happened. Really, the time to go to the DOL was when the HR person and her boss refused to fix their mistake. You may still have some legal remedy at this point, but honestly, I'm going to bet it's cheaper in the long run just to pay the ER bill and move on. At least you won't have to worry about the pre-ex, so this won't be something that comes back to bite you in the butt 8 or 9 months from now.
posted by pecanpies at 5:23 PM on August 18, 2010


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