Comments on: Where's Riki-tiki-tavi when you need him?

Question: Where's Riki-tiki-tavi when you need him?

bingo — Mon, 02 Jun 2008 19:48:18 -0800

My former employer is telling me to make my COBRA payments directly to them (the employer). That doesn't seem right to me. Is this common/legal/legitimate? Can I circumvent them and just pay the insurance company directly?

By: jessamyn

jessamyn — Mon, 02 Jun 2008 20:00:03 -0800

I made my COBRA payments to my former employer when I wasn't working for them anymore. It was sort of a headache. They gave me a big song and dance about how if I was even one day late on my payments, they'd cancel me. So, when I got regular health insurance and didn't need COBRA anymore, I just figured I'd stop paying and they'd cancel me immediately. I called to cancel a few days after my payment was due.

Turns out, they didn't cancel me as threatened. They sent in my payment anyhow and then sent me a registered letter demanding my payment. We straightenend it all out -- they called the insurance company who refunded their payment and they gave me the stinkeye forever after -- but it was a headache. make sure you understand all the terms of your arrangement with your former employer. So yes, this is common and I don't htink you can pay directly. I know that I asked at the time and I couldn't.

By: Pater Aletheias

Pater Aletheias — Mon, 02 Jun 2008 20:02:08 -0800

Yeah, that's the way we did it. Gave the money straight to the employer. I think that's standard.

By: ottereroticist

ottereroticist — Mon, 02 Jun 2008 20:05:54 -0800

Yep, that's how I did it.

By: bingo

bingo — Mon, 02 Jun 2008 20:10:13 -0800

Hmm. Well, I doubt the employer will cancel the policy on me for late payments, but I'm sure they are not going to make my payments for me until they've received them from me. In other words, if I send them the money, they'll forward it; if not, they won't.

The bigger issue, though, is that I really don't trust them to do this properly, and I wish there was a different way.

By: OlderThanTOS

OlderThanTOS — Mon, 02 Jun 2008 20:10:58 -0800

That's how we always did it. Make sure you get a receipt :^)

By: Deathalicious

Deathalicious — Mon, 02 Jun 2008 20:11:04 -0800

Way off topic, but: before you commit to Cobra make sure it isn't cheaper/better to get insurance yourself. A lot of companies provide coverage way beyond what most people need. I was paying something like $240+ per month on my parents' Cobra once I was no longer covered under the family plan. Then I went and got individual insurance that covered all of my needs and cost around $100 (even now at over 30 my insurance including dental rider is around $120/month).

By: kindall

kindall — Mon, 02 Jun 2008 20:15:28 -0800

COBRA just means you can remain in your ex-employer's group plan. The company pays for the group plan -- the insurance company is not prepared to take individual payments on that plan. So yes, you have to pay your former employer.

By: nanojath

nanojath — Mon, 02 Jun 2008 20:35:55 -0800

I'm pretty sure that when you sign up for COBRA you simply remained enrolled in your employer's insurance plan. They are going to make the same lump payments to their insurance providers as always and your money will simply be added to their books - technically it no doubt has to be accounted against their insurance costs but pragmatically it is really not going to operate any differently than your insurance did previously. This is basically the essence of COBRA - your employer is legally obligated to keep providing you with your existing insurance coverage at more or less their cost. You pay them the money because they're no longer covering that cost as part of your compensation and/or deducting part of it directly from your income.

If you're really worried about your employer's competence in managing your insurance by all means take special care to keep copies of your forms and records of your transactions, perhaps use return receipt or other tracked mail so you have a record of having fulfilled your legal requirements to maintain coverage. But honestly, this is just the way it's done and other than sending the checks it should be no different than when you were insured as an employee. I've been on COBRA incidentally and my wife is an HR professional and we're pretty sure this is all basically correct.

By: tachikaze

tachikaze — Mon, 02 Jun 2008 20:40:16 -0800

Gave the money straight to the employer. I think that's standard.

out here CA it's been my experience that the company sets up an intermediary to handle the COBRA processing.

2nding the look-for-your-own-plan idea. COBRA was north of $600/mo this last time, but Blue Shield has a $1700/yr annual deductible plan for $200/mo including common dental coverage.

By: rtha

rtha — Mon, 02 Jun 2008 21:17:41 -0800

Keep in mind that switching to a private plan may introduce all sorts of weirdness about pre-existing conditions. None of this comes into play if you move from an employer-based group plan (or COBRA) to another employer-based group plan, AFAIK.

By: cuddles.mcsnuggy

cuddles.mcsnuggy — Tue, 03 Jun 2008 05:50:27 -0800

Funny you should ask this. I work at an insurance company -- at work right now -- handling enrollments & COBRA. Yes, it is standard to pay the employer. The employer/company is the entity who has the contract with the insurance company, not you as the member. When a member goes on COBRA, for the insurance co. it basically means that the member remains covered under their group plan, for a set amount of time, as if they never left. At my work, we won't even entertain the thought of taking money directly from members (we will return anything that looks like a personal check) .... it MUST come from the company that has the contract with us.

By: cuddles.mcsnuggy

cuddles.mcsnuggy — Tue, 03 Jun 2008 05:58:52 -0800

Oh, one more thing, if your company sets up an intermediary to handle the COBRA, we call that a "Third Party Administrator" (TPA). The insurance contract is still with the company/employer and we at the insurance provider administer the plan the same way. The only difference is that the TPA looks over members' forms to make sure they're filled out correctly, then the TPA forwards those forms to us. The TPA may also collect the members' money & forward to the company/planholder. I hate TPAs. They mess up a *lot*.

By: sondrialiac

sondrialiac — Tue, 03 Jun 2008 10:13:15 -0800

Keep in mind that switching to a private plan may introduce all sorts of weirdness about pre-existing conditions.

Actually, it shouldn't, as long as you have had insurance for 12 months and you don't have a gap in insurance coverage for longer than 60 days, they must cover you for your pre-existing conditions. When you switch, you'll need to get a certificate of creditable coverage (proof that you had coverage) from your old company, and send it to your new insurance company.

By: Rash

Rash — Tue, 03 Jun 2008 14:05:06 -0800

out here CA it's been my experience that the company sets up an intermediary to handle the COBRA processing

Mine, as well. My checks went to a company in Charlotte NC called AON Consulting.

as long as you have had insurance for 12 months and you don't have a gap in insurance coverage for longer than 60 days, they must cover you for your pre-existing conditions.

Ha! Tell that to Blue Shield, who rejected me for having the pre-existing condition of warts.

By: sondrialiac

sondrialiac — Tue, 03 Jun 2008 14:13:38 -0800

They don't have to give you insurance, but, should they choose to cover you, they have to cover your pre-existing conditions. As long as you disclose them.

Of course, I am aware that they're assholes and will try to screw you if they possibly can.

By: ptm

ptm — Wed, 04 Jun 2008 00:57:29 -0800

Just as an aside, COBRA is a profit center, which is why TPA's exist. Definitely look for individual coverage that suits your actual needs. I asked, a long time ago, why COBRA was so expensive and they basically said they were working on the assumption that if you carried over to COBRA you probably had pre-existing conditions which were expensive.

By: MarkAnd

MarkAnd — Fri, 06 Jun 2008 06:52:45 -0800

Actually, it shouldn't, as long as you have had insurance for 12 months and you don't have a gap in insurance coverage for longer than 60 days, they must cover you for your pre-existing conditions. When you switch, you'll need to get a certificate of creditable coverage (proof that you had coverage) from your old company, and send it to your new insurance company.

It's 63 days and there's nothing about 12 months. Group insurers are restricted in only having pre-existing condition exclusion lookbacks of 12 months (18 for late enrollees), but there's nothing saying that your coverage is creditable only if you've been covered 12 months. This is a law called HIPAA dealing with portability of insurance between group plans. If you switch to individual insurance, all bets are off barring a separate state health insurance regulation restricting insurance coverage.

They don't have to give you insurance, but, should they choose to cover you, they have to cover your pre-existing conditions. As long as you disclose them.

It varies state by state, but in a lot of states, you have this exactly backwards.

Just as an aside, COBRA is a profit center, which is why TPA's exist.

COBRA is a federal law which requires large employers (20+) to offer continuation coverage basically at cost. They're allowed to add 2% for admin, which they almost always do. Why it's so much more expensive is that the typical employer subsidizes 70-80% of the cost when you are an active employee. I don't understand what you mean by "this is why TPA's exist."

Definitely look for individual coverage that suits your actual needs.

Again, this is usually the opposite of what you should do if you're unemployed and offered COBRA. Group contracts are almost universally better than individual contracts. Group prices are almost universally better than individual prices.

And let me go back to this:

Of course, I am aware that they're assholes and will try to screw you if they possibly can.

There is a major crisis in affordability and availability of health insurance in the United States. In most states, if you're unemployed and have pre-existing conditions, you're totally screwed. State and federal laws mostly do nothing to prohibit the predatory cherry-picking practices of insurers offering individual insurance. What I find troubling about the above statement is that you've misunderstood your rights (with individual insurance, you usually have none) and are saying that they're going to limit coverage because they're assholes. They're going to limit coverage because there's no regulatory requirement that they do otherwise. This is the seriously broken thing about health insurance in America.

By: Deathalicious

Deathalicious — Fri, 06 Jun 2008 12:55:40 -0800

Again, this is usually the opposite of what you should do if you're unemployed and offered COBRA. Group contracts are almost universally better than individual contracts. Group prices are almost universally better than individual prices.

Well, considering my individual insurance now is cheaper than what I paid for CORBA back in 2000, I'm going to say that sometimes it is cheaper. Granted, you have less coverage but a lot of people have more coverage than they really need and they don't realize it. Once you are paying for the insurance yourself, it can be a much better deal to get cheap insurance and cover incidental health costs yourself. This assumes you are in good health and your major costs are prescription drugs (most plans, even the cheapest, offer decent prescription plans that help eat some of the cost), occasional doctor visits, and dental check ups (dental riders are usually ~$20/month and usually offer one free cleaning).

I'm saying all this because everyone told me what you are saying and thus I ended up paying easily twice what I needed to for health insurance for I think a year or more and when you're paying nearly 10% of your pre-tax income (CORBA was over $200/month, I was making a little over $20k) on insurance as a healthy 20-something that kinda sucks. Let me repeat it: if you are young, healthy, and don't have a family, getting an individual plan with a high deductible is a very, very good idea.

By: MarkAnd

MarkAnd — Fri, 06 Jun 2008 17:59:22 -0800

I'm saying all this because everyone told me what you are saying and thus I ended up paying easily twice what I needed to for health insurance for I think a year or more and when you're paying nearly 10% of your pre-tax income (CORBA was over $200/month, I was making a little over $20k) on insurance as a healthy 20-something that kinda sucks. Let me repeat it: if you are young, healthy, and don't have a family, getting an individual plan with a high deductible is a very, very good idea.

Sure, it can work, and there's nothing wrong with exploring all your options. I would warn generally (not you, specifically) that you read the individual policy coverages and exclusions carefully.