Question
What is the name of your state? Georgia.
Hi everyone.
I have a dilemma and I hope someone can give me some advice on how I
should handle it.
I took an early retirement in August of 2005. (Or so I thought)
At that time I was offered a pension option of monthly payments or a
lump sum payout. I chose the lump sum payout. I was told that I would
be receiving information on my health insurance options thereafter.
I received my options (none of which mentioned a Cobra option.)
I chose the plan that I had while employed with the company and made
my premium payments and all was fine.
In March of 2006 I made a premium payment that would cover through April of 2007.
Again, all was fine.
At the end of August we received a phone call from the children's hospital.
They asked if we were aware that one of my children no longer had health
insurance coverage.
I began making phone calls to determine what was going on. I found out that
my entire family no longer had health insurance coverage.
I finally found out that the reason why we no longer had coverage was because
of an "administrative error" on the company's part. They said that they should
have offered me a cobra plan instead of the one that they had because my
seperation from the company was not a "normal retirement". After looking
into the policy I would have to agree with their point. I obviously was not
aware of this when I left the company, but I would have hoped that they would
have been.
On September 25, 2006 I was offered cobra coverage. It was backdated to start
August 01, 2005.
I sent an appeal to the company and I received a response yesterday.
In a nutshell they are stating that my options are as follows:
1) Choose the backdated cobra policy, which they said is good through 11/24/2006.
They would apply my premiums that I paid on the other policy towards the cobra
policy. I would be roughly $6500 shy of meeting all the premiums under this option.
2) Do not elect cobra coverage and they will seek recovery for claims paid after
my seperation date from the company and premiums paid after my seperation
date will be applied to any erroneously paid claims. My premiums amounted
to $3605.00. I know that this does not come close to covering all of my claims
because I have a large family and my 2 youngest are special needs kids.
I am working with the Federal Dept. of Labor on this matter, but I feel that I
may need to seek legal aid as well.
I don't understand all of the cobra guidelines, but it appears to me that the
company has violated proper notification procedures.
Especially since I had to contact them just to find out what was going on and they
did not initiate any type of options until after I contacted them.
Sorry about the length of the post. I am trying to provide as much detail as
possible in hopes that it will assist in obtaining any much need advice on
this matter.
Thanks.
Answer
Yes, your employer made a mistake. They are showing you how to fix it. COBRA is EXPENSIVE, which is why you will still owe $ once you opt for it.
Their mistake more than likely isn't binding on the insurance company. YOU owe the insurance company the COBRA premiums.
Answer
Yes, your employer made a mistake. They are showing you how to fix it. COBRA is EXPENSIVE, which is why you will still owe $ once you opt for it.
Their mistake more than likely isn't binding on the insurance company. YOU owe the insurance company the COBRA premiums.
Yes, I agree that they are showing me how to fix it.
It appears to me that the fix is one sided though.
The fact that they provided absolutely no notification of my insurance termination
and absolutely no notification for cobra coverage until several months after the
qualifying event, not to mention the fact that I initiated the contact in order to
find out and "prompt" them to begin doing anything at all, seems to me that
they are accountable for being in violation of the cobra guidelines for proper
notification.
They have already stated that my qualifying event was on August 01, 2005.
They sent the cobra notification to me on Sept. 25, 2006.
I believe that the mandated time allowed for notification from an
employer/plan administrator is 44 days. If they fail to provide notification, within
the time allowed, then they can be fined penalties from $0-$110 per day
per participant in the plan.
Is my interpretation of the cobra notifcation guidelines correct?
I had no intention of playing hardball. My desire was to work with them in
order to arrive at a solution that we both could live with.
The options that they presented me with, due to a mistake on their part,
seem one sided. (Their way or no way.)
There have been cases where companies were penalized for failing to properly
notify employees of cobra rights, even though they found that the failure was
due to "administrative error".
I just didn't want to take it to the point of seeking restitution by means of
legal aid.
Thanks for your comments on the matter.
Answer
There are a few problems. Your employer screwed up, not the insurance company. The insurance company wasn't initially notified about your termination (whatever you want to call it).
There is no negotiating with premiums with the insurance company. They are not legally allowed to charge you something different than what they charge the next customer.
If the employer is fined, that has nothing to do with you.
cbg will be by this evening to give you other advice.
Answer
What does the DOL say?
Answer
The individual, that I am working with at the FDOL, said that they cannot enforce
the issue from a legal standpoint, but the individual has made a call to the
Benefits Administrator, who was in a meeting, and left a message informing
the Benefits Administrator of the "possible" monetary penalties that they may be facing, due
to the lack of timely notification multiplied by the 7 participants that were in my plan.
We are awaiting a response.
Answer
But, the penalties that they pay will be to the govt, not to you.
Answer
Am I reading the 2 examples below wrong? It appears that the plaintiffs were awarded
the penalty charge?
Court Orders Plan To Pay $5,885 COBRA Penalty
March 8, 2004
Santa Rosa, CA
A former member of a union welfare benefits plan and his wife were awarded $5,885 for violation of their COBRA rights. Specifically, the court ruled that the plan unlawfully refused to provide a COBRA election notice. Although the maximum penalty for failure to provide a COBRA notice under ERISA is $110 per day, the court awarded $55 per day for a total period of 107 days. The reduced amount reflected the court's belief that the plan had not acted maliciously and that it ultimately offered full COBRA coverage retroactively.
As an example, in Shephard v. O’Quinn, an employer failed to give a terminated employee the required COBRA election notice, and neglected to turn over to the insurer health coverage premiums that were deducted from the employee’s last few paychecks. A federal court in Tennessee awarded the employee his medical expenses and attorneys’ fees, and $90,860—the maximum $110 per day ERISA statutory penalty for a total of 826 days.
Answer
In the first example the employer REFUSED to provide COBRA. Your employer made a mistake, and is trying to correct it.
In the second, they STOLE money. Your premiums were paid directly to the insurance company.
Why is it that every time someone makes a mistake, people want to get PAID? Then, those same people are the ones who complain about expensive premiums and what's not covered.
Answer
In the first example the employer REFUSED to provide COBRA. Your employer made a mistake, and is trying to correct it.
In the second, they STOLE money. Your premiums were paid directly to the insurance company.
Why is it that every time someone makes a mistake, people want to get PAID? Then, those same people are the ones who complain about expensive premiums and what's not covered.
I did not say I wanted to get paid.
I incurred medical claims due to the fact that my insurance was dropped with no
notification whatsoever.
As I said, I have 2 special needs kids that require medical supplies along with
regular visits to monitor their conditions.
My wife was undergoing tests for her digestive tract to determine what was
causing severe abdominal pains. Through the month of August we were addressing
these situations as though we were still under insurance coverage, when indeed we
were not.
Did the company act in good faith and provide adequate notification for Cobra
in order that we could make an informed decision?? I think not!
As I mentioned they did not contact us to try to "provide a fix". I hounded them
for answers to what was going on and only then did they decide to provide notification
for cobra.
Meanwhile we had to pay for emergency room visits, prescriptions, dentists, etc.....
Not to mention that we have had to postpone surgery on both boys!
Their fix for the situation is for us to either pay nearly $6500 for cobra coverage
immediately or be faced with having to cover all of our claims since August of
2005.
Again, all I wanted was to be able to reach a compromise that is fair for both
parties.
You tell me who is looking to get paid in this situation!
Answer
Here's the deal, if you had been offered COBRA coverage, you would have had to pay everything you have plus the $6500 they now seek. If you had refused to continue under COBRA, you would have had to pay all the medical expenses incurred since the seperation with your company escept for the premiums you have paid in which would be credited towards the payments the insurance company has aleady made and would reduce the amount you would owe to the insurance company as repayment of what they have paid on your behalf. (since they have aleady paid the bills).
Now the bigger problem. If you elect to not do the COBRA, it would make you without insurance since the seperation and since you apparently are not eligeble for coverage through your former employer, what are you going to do for insurance from this point forward. Any insurance will then consider many things as pre-existing and not eligable for coverage.
The insurance folks can give you better direction on this part but if you had continous coverage until now, in certain situations a new insurance company will pick up with no pre-existing restrictions. I don;t know exactly how it works but it has something to do with a letter of credible coverage.
Your only injury would be what ever you did do that you would not have if you did not have coverage. I would presume most of what was done had to be done anyway,
How would you have paid for that since you seem to infer you would not have accepted COBRA coverage.
You seem to want it both ways. This was an innocent error. They did not give you COBRA info because they believed you were eligable for continued (retirees) coverage.
Answer
You have the right to be an informed consumer. When you are separated from a job, you are offered COBRA. When you didn't notice a HUGE increase in premiums, that should have been your first clue.
Your employer isn't asking for the money. The insurance company is. The insurance company didn't do wrong by you.
Answer
I can tell you this much. It's not exactly the same situation but it shows the way the DOL is likely to look at this.
My husband has been covered on his ex-wife's insurance, per the divorce decree, for over 15 years. That coverage comes to an end on January 1, also per the divorce decree.
The DOL told him that since the qualifying event (the divorce) was longer ago than the COBRA statute dictates he receive coverage, even though he is losing coverage for anotherwise qualifying event, he is not eligible for COBRA.
In your case, you have received coverage for over a year beyond the the qualifying event. Extrapolating from my husband's situation, it is unlikely the DOL will conclude that penalties are due. The law requires that you be offered coverage. You were offered, and received, coverage. An administrative error regarding who is liable for payment does not change that.
Answer
I guess it is hard for me to understand why they made it retroactive back to
August of 2005. I do understand that they are looking at it from a viewpoint of
the way it should have been if they had not made the mistake.
If they had not made the mistake and they would have pointed out to me that
my option for insurance was cobra at my time of seperation from the company,
I highly doubt that I would have made some of the decisions that I did. The insurance
package, that I was offered, did play a part in my retirement decision.
I would have probably either remained at work until I could find another means
of insurance or I would have accepted cobra for a short term until I was able
to convert to a different policy. Either way I would have had the time to make an
informed decision on my options.
The way my options stand now, my premiums that I paid up through April 2007
are either going to be eaten up by the claims that we have had since Aug. 2005,
along with additional out of pocket to cover any claims that the premiums did not,
or the premiums that I paid up through April 2007 will be applied to a cobra policy,
which they said I could continue until Nov. 24, 2006, and that requires an additional
$6500.00.
Their "fix" is for me to choose the lesser of the 2 evils, in my opinion.
My insurance was "physically" cut off at the end of July 2006. Why not begin from that date?
In my opinion they should absorb their mistake for the months prior to the cut off date.
I found out that they changed my status from "retired" to "terminated" on June 28, 2006.
What infuriates me is the fact that they did not contact me in order to work towards
a reasonable resolution for the mistake that they made. If the children's hospital had
not contacted us at the end of August, we would have continued racking up claims
until the denied claims started showing up, at which point we would have started
inquiring about what was going on.
A simple phone call back in June, or whenever they discovered their mistake, would
have made this situation a little easier to deal with.
Answer
Again, you are asking the insurance company to pay for a mistake that the employer made. YOU could have figured out the mistake back then, had you read your papers. Your responsibility is to be an INFORMED consumer.
The insurance company is not legally allowed to charge you less premium than the next customer, which is what you want them to do.
For all I know, you realized this at the time, kept your mouth shut because you didn't think it would be "caught", and now its coming to bite you on the butt.
Good luck.