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Benefits canceled for nonpayment when provider stopped sending payment requests to designated account


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In my situation, automatic payment was set up when COBRA benefits began in mid-September 2018. The payment requests were to be sent to a bank account that has overdraft protection. The first payment request, which covered three months of premiums due to coverage being backdated, hit the account and was processed and paid in full on October 2. The beneficiary used coverage for a flu shot in late September or early October and did not use the benefits for the next few months. In late December, after the deadline had passed for signing up for a new health plan, the beneficiary called the provider wit a coverage question and was informed that her benefits had been terminated in September or October for nonpayment. Knowing this could not be possible as payments were made automatically from an account with overdraft protection, she asked for a review and the matter was sent to a supervisor. She left a voicemail that day for the supervisor and called every few days to see if there was a resolution. She was told the matter should be resolved in about a week.

After numerous calls in which she was told the matter was being reviewed, on January 31 she sent an email.  The email included a screenshot of the provider's website section that shows her payment history and she explained that, though this alleged payment history shows more than one payment, she reviewed her designated bank account and only one payment request ever was sent to the account so only one payment had been made in response to that single payment request. She offered to call the bank with the provider to verify that this was true and that the provider's accounting records were incorrect. She later was told that the January 31 email was treated a s a review request and that the review would take about one or two weeks for January 31. Today she received the following statement from the provider:

"First and foremost my apologies. I recently conveyed to you the reason for the cancellation of your Cobra plan was due to a chargeback. That information was incorrect. The reason for the cancellation is because the last payment we received for your Cobra was in November 2018. We have not received a payment since then and unfortunately it is too late to pay back any missed premiums that may be due."

As explained, there was no November payment. The only payment was made on October 2 in response to the only payment request the provider ever was sent to the account for COBRA benefits. If automatic payment has been set up and a payment is properly processed, is it unreasonable to assume that the provider will continue to send payment requests to the designated account for subsequent periods of coverage? Can the beneficiary's benefits be canceled and the provider refuse to reinstate the benefits under these circumstances? Even if coverage could be backdated to the date of cancellation, can coverage be reinstated now and cover the beneficiary going forward?

 

 

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I am a little confused by your post, sorry.

You state that COBRA started mid-sept, but you paid 3 months premium on October 2?  When did you become eligible for COBRA?

What do you mean by automatic payments were set-up at the bank?  

What is a payment request, and what do you mean it was sent to the bank?

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Thank you for your interest. My health benefits as an employee ended in mid-June 2018. I had not received notice of COBRA eligibility and in mid-September 2018 I called Fringe Benefits Group (fbg), which is the company that handles my insurance and payments for my insurance, to request information on COBRA benefits. Because I had not received the notice of COBRA eligibility, I was permitted to sign up for COBRA benefits the next day and coverage was backdated to begin on 7/1/2018. When I signed up for COBRA benefits, on the insurance company's website I could choose and did choose to have the monthly premiums automatically paid from my checking account. This is how I paid my insurance premiums when I had insurance through my employer. Each month, fbg was to send a payment request to my bank account for the amount of that period's premium and then the bank would process payment to fbg for the requested amount. I remember reading an article on how strict COBRA is and how one should never miss a payment so the article recommended setting up automatic payments, which I did. My designated bank account for these automatic payments has overdraft protection so, if fbg were to send a payment request and the balance in the account was not sufficient, my bank would cover the payment anyway and then would charge my account a fee for the service (and of course I would have to transfer funds to the account to cover the payment and fee). This overdraft protection was never called into play for a payment to fbg, but I knew immediately when I was told that I had missed a payment or that there had been a chargeback on a payment that such an occurrence was not possible. My account received a payment request for the premiums owed for the first three months of coverage, and my bank duly processed the payment in full on 10/2/2018. There was no dishonor or chargeback on this payment. For some unknown reason, fbg never sent another payment request to my account so my bank sent fbg no further payments. I later saw, after signing in on the insurance company's website, that the accounting depicted for my payments, including the allocation of those payments, was incorrect. I made only one payment as my account received only one payment request, yet the website showed an additional payment from me! I took screenshots of these fictitious accounting, which I sent to fbg, and sent a redacted copy of my bank statement and explained why their accounting was incorrect. I also offered on more than one occasion to call my bank with them on the line so they could ask my bank questions and could verify that I was correct, that my account had only received one payment request so only one payment had been made, and that there had been no dishonor or chargeback on that payment. I used the insurance twice with no problem arising, once in late September or early October for a flu shot and again in late November or early December when I showed my insurance information to get a discounted vision exam. On 2/15/2019 I received an email from fbg apologizing for saying my benefits had been canceled due to a chargeback and they now know that my benefits were canceled because my last payment to them was in November! As explained, there was no November payment to fbg because they never sent my account a payment request for a November payment. Please let me know if you need additional information.

 

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Additional information...no way, just the pertinent facts.  Your response is long and rambling, leading me to believe you are at fault.  But I will give you the benefit of the doubt for now, but it does appear that you may have made a late initial payment.

1.  What was your date of separation.

2.  Did you have any extension (non-cobra) of health benefits?  It appears that you may have had coverage thru the end of June.  If yes, provide dates of this extension of coverage.

3.  What date did you sign-up for coverage in September?

4.  It appears that your first payment for cobra coverage was the payment you referenced as being duly processed on 10/2/2018.  Is this true?  If not, please explain.

5.  What date did the company receive a payment from you, and how much was that payment.  Keep in mind, I do not care about what date your bank duly processed the payment, only the date that it was received.

6.  What is the monthly cobra charge?

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1. My date of separation was 6/17/2018.


2. I had no extension of benefits. My health benefits ended on 6/17/2018. The only "extension" was the extension that permitted me to sign up for COBRA benefits later than the stated deadline because I had not received the notice letter that gave information about the COBRA election until the letter was emailed to me on 9/13/2018.


3. I returned the completed election form by email on 9/14/2018. I was told the coverage would be backdated to begin three months before the date I actually was signing up for COBRA benefits and that my first payment would cover the premiums for the first three months of coverage, including the backdated coverage. The insurance website states that my COBRA benefits began on 6/18/2018 and terminated on 9/30/2018.


4. Yes, the only payment I made for COBRA benefits was taken from my account on 10/2/2018 ($632.25) in response to fbg's first and only payment request sent to the account I designated for payment of premiums. That payment covered the first three months of premiums. I did not receive an invoice; fbg merely sent a payment request directly to my bank, and the bank automatically paid the requested amount from the account I had designated when signing up.


5. Though the $632.25 was debited from my account on 10/2/2018, fbg's accounting shows that fbg somehow received the funds on 9/27/2018. Fbg's accounting states it received a second payment in the amount of one month's premium ($210.75) on 10/1/2018, but I never made a second payment, because fbg never sent another payment request. Something is wrong with fbg's accounting records.
6. My monthly COBRA charge, per the insurance website's accounting section, is $210.75. The monthly cost listed in the website's "cost" section, however, states my monthly cost is $48.51. I sent a screenshot of each section to fbg, pointed out the discrepancy, and asked for an explanation but didn't get a reply. In that email, I also pointed out the issues with the alleged dates fbg indicates they received my payments and pointed out that I made only the first listed payment.

20190214 McCraw - fbg website depiction of monthly cost of COBRA benefits.pdf

20190214 McCraw - fbg website depiction of payment method and alleged payment history of COBRA benefits.pdf

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Thank you for the additional information, it is very helpful.  

If I understand the situation, coverage was in effect for July, August, September and October of 2018.  Monthly cobra premium was $210.75. There were 2 separate payments, the first was $632.25 for the first 3 months and the second for $210.75 for October.  The administrator did not receive any additional premium payments and cancelled your coverage as of November 1, 2018.  Based on what you have provided it does appear that the administrator was correct in cancelling your coverage for non-payment of premium.  And, yes, they are within their rights to cancel and not reinstate.

In your original post (at the end) you agree with my assessment and question the reliability of the administrators process, which is fair  This is where I do not have enough information to give you a complete answer.  What we do know is that the process did work at least once for you, the last payment of $210.75 for October. Once set-up, these processes run smoothly, and if there are problems it is usually with everyone’s account, not just one.  Is it possible that the administrator sent the request and your bank did not pay?  I would also ask, how did you not know, were you not balancing your account?

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  • 1 month later...

I too have had problems with COBRA's autopay. A representative even said they have a problem with autopay especially when something changes with the autopay details. It happened when I first set it up in April.

And then again in October, I had to change from my HSA card (exhausted) to a regular credit card for my payments in Nov and December 2018. The autopay didn't work for Nov so I paid it and made sure autopay was set for December.

I received a notice in January 2019 that they terminated my coverage December 1, 2018 due to nonpayment. I requested for them to let me pay the December payment and they denied the request. I even showed my account that signified it was on autopay.

I had many medical services in December and am now on the hook for over $3,000 in medical fees. Is there anything I can do?

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In both situations in this thread, it appears as if the qualified beneficiaries' banks didn't make the scheduled auto-payment.  I am not sure why not, but is likely that each of your beefs is with the banks and not with the health plan.

There is no requirement under COBRA for a plan to "request payment" of the monthly COBRA premium.  It is up to the qualified beneficiary to make them on a timely basis.

Marcia may wish to speak with an ERISA/COBRA attorney.  It is hard for me to completely understand the situation and there may be a problem with how everything went down.

JJ may wish to investigate the possibility that the plan terminated COBRA benefits before the end of the 30-day grace period.  I can't tell for sure how long after the due date the coverage was terminated.

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