Question
What is the name of your state? CA
Hey folks,
I am in a battle with my previous employer over my Cobra premiums. I was offered contiunation coverage for me and my dependent. I elected to drop my dependent to lower my monthly premium cost by half. My company agreed to this change and accepted and processed my payment which was to cover 4 months. I sent them payment via a check along with a cover letter outlining the terms that we agreed upon. I discovered a few months later, when the next payment was due,that they had changed the terms of our agreement without telling me. They left my dependent on my coverage and applied my payment only to 2 months instead of our agreed-upon 4 months. I also learned that my coverage was no longer active for lack of payment.
My company is willing to reinstate my insurance but only if I make a payment in arrears for the larger amount with my dependent named on the coverage. They're argument is that I missed the 60-day deadline in which I could make changes to my coverage. My argument is that I spoke with their staff member, changed the terms of my coverage under her supervision & guidance, and made the payment I was asked for under the new terms.
Both my dependent and I were operating with the knowledge that I was the only one with coverage. My dependent signed on for coverage at her place of employment. Because we were informed that she was no longer covered under my plan, she did not submit any claim. Now they are asking me to pay for her coverage, which according to our agreement, did not exist.
They are immovable. Although they freely admit to providing me with incorrect information - - accepting payment from me based on our new arrangement - - applying my payment contrary to our agreement - - not notifying me that there was any problem, they still will not honor the agreement.
Does this fall under bait and switch tactics? How do I get them to honor their commitment? Do I have any recourse?
Michael
Answer
A couple of questions:
When you were employed, was your portion of the premium taken out of your paycheck pre-tax or post-tax? If post-tax, did the option of having it taken out pre-tax exist?
For now, forget about the fact that you spoke to a representative and worked out the terms with her. This is a yes or no question, and I have a legal reason for asking it this way. Did you, in fact, miss the 60 day window? That is to say, did you make this arrangement with her more or less than 60 days after you received the COBRA notification?
Both these questions are VERY IMPORTANT to the answer of what, if any, legal options you have.
Answer
Hey, thanks for the response.
The coverage was post-tax for me while I was employed, pre tax for my dependent. I wasn't offered an option of pre vs post. That's not to say it didn't exist, I just wasn't offered an option.
Yes, I did miss the 60-day window. But, I wasn't aware of a 60-day window (obviously neither was the benefits advisor) until they brought it up in the last few weeks.
Answer
Since it benefits both the employee and the employer to have you take the deductions pre-tax, I can't imagine that if the option was available they wouldn't have offered it to you. So I think it's a safe assumption that the option didn't exist.
That may make it slightly easier, or not. If the pre-tax option had existed, even if you did not avail yourself of it, that would have meant that the policy was under a Section 125 plan. Had that been the case, it would have been ILLEGAL for them to make the changes, since you say you did miss the 60 day window. Section 125 plans, because of the pre-tax feature, are VERY heavily regulated at the Federal level, and changes can ONLY be made at very specific times of the year. While you are employed, you can add or subtract dependents when you first become eligible; during open enrollment (which is a 30 day window that happens once a year, almost always at the time the policy renews) or for a 30 day window when you have a qualifying event (marriage, birth, adoption, divorce, death) at which time you can make the change appropriate to the event (i.e. you can add the applicable dependent in the event of marriage, birth or adoption; drop the applicable dependent in the event of divorce or death).
After your employment terminates, regardless of whether it is voluntary or involuntary, your employer has up to 44 days to notify you of your right to COBRA. Once you receive your notification, you have 60 days to elect COBRA, and you may change your mind as to your election within that 60 day window. Once that 60 day window closes, the ONLY time you can make changes is during open enrollment.
Those are the ONLY times under a Section 125 plan that changes to dependents can be made under the law.
When a Section 125 plan does not exist, the only difference to the above is that the employer has the option of making an exception IF they choose to AND IF the insurance carrier agrees. Since the insurance contract is between the employer and the insurance carrier (though you are covered by the contract you are not a party to it) BOTH of them must agree to the exception before it can be done.
Your employer may be willing to make an exception for you, but if the insurance carrier is not willing to agree to it, neither you nor the employer can force them to. Likewise if the representative you spoke with was not authorized to allow you to make a change outside the 60 day window, the company is not required to make an exception.
Obviously I can't know your employer's reason for backtracking the agreement. But I'm also not able to come up with any way you can FORCE them to make the change either, unless you are able to convince them that your cover letter consitutes a contract. You can show it to a local attorney and give it a try, but to be honest with you I wouldn't be holding my breath. COBRA is a Federal law and is Federally regulated.
The only other thing I can suggest is that you call the Federal DOL (which is the regulatory agency which handles COBRA issues), describe what happened and see what they suggest. But it would have been much, much easier if you had done this within the 60 days. I strongly suspect that your initial COBRA notification (which, if you are like most people, you didn't read thoroughly) did tell you that you had 60 days to finalize your election.
Answer
CBG,
Thanks so much for your thorough response - - very kind of you! Had my employer's benefits staff been as knowledgable as you, and had I read my paperwork cover to cover, then I wouldn't be in this mess.
It will always remain a mystery to me that a company will have a customer service staff to provide information but will rarely stand behind the information they provide.
Thanks again.
Michael