Question
What is the name of your state? New Jersey
Good evening! I humbly request advice.
I worked for a health insurer, was laid off in the summer of 2004, and elected COBRA. The plan renewed in January, and the premium increased slightly. All fine so far.
In May of 2005, I received a notice from the COBRA administrator that due to a 'billing oversight,' the premium for 2005 was being raised again, about $80 per month. The notice gave me about 15 days to pay the retroactive increase or risk termination. I paid.
My first question is, can they retroactively change five months' worth of premiums? My concern is that it might be difficult to do anything because they specifically went back to the beginning of the plan year. Most of the language on changes to COBRA premiums that I've read says that "generally" premiums must be established in advance of the plan year, but I haven't been able to find what the exceptions or rules are.
Next, the company I worked for considers breaking the law just another cost of doing business, so I also wonder whether they have increased the premiums of their COBRA members out-of-sync with the premiums for active employees. Other former employees confirmed that they received retroactive demands for money. I have asked the insurer's HR department for the current premiums for active employees, but they will not give them to me because I am not employed with them anymore. Does this seem worth pursuing?
Thanks for reading!
Answer
Only you can decide if it is worth pursuing. IF (and neither you nor I has any way of verifying on our own) there was a legitimate oversight or clerical error, they are probably justified in the request, though I personally would have eaten the shortages for past months and only requested the higher rate on-going. They are not legally obligated to provide you with info on what the active employees are paying. It wouldn't be relevant anyway. Active employees only pay a fraction of the overall premium, if anything, and the law doesn't specify what the fraction must be; they could be paying ten percent, twenty percent, forty percent, twelve and a half percent, any percent the employer wishes to charge them including nothing at all. Former employees on COBRA pay 102% of the overall premium, no more, no less.*
If you decide to pursue the issue, you would do so through the Federal DOL.
*Technically they could pay less, though they cannot be asked to pay more. I have yet to see an employer, however, who didn't charge exactly the 102% permitted by law, and I've been administering COBRA plans ever since COBRA was signed into law.
Answer
Thanks for the advice, everyone.