Wrong COBRA Rates Given by Employer

[Guest mamaeck]

Help! My husband worked for an extremely large telecommuications company. I had sent his benefits department an e-mail requesting COBRA rates. My husband was considering another job where there were no benefits; however, we could pick up COBRA for the 18 months and then pick up a plan through the AICPA. He paid over $200 a month into his benefits for family coverage.

So I got the e-mail back with the rates and felt it was beneficial to take the other job and pick up the COBRA as it wasn't that horribly expensive.

However, once we got the official paperwork, the rates were $600 more a month than what the e-mail had said. When I contacted the benefits department, they stated that they quoted me lay-off rates as they didn't have a reason for my requesting the rates. They automatically assumed he was being laid off. No where in the e-mail that they sent to me did it say that the rates were just a sample or subject to change based on termination reason. We used the rates that we were given in our determination. I feel that they should honor those rates. The company said they always use the lay-off rates.

Is there anything that I can do about this? I have all the documentation. I have all the e-mails, etc.

Thank you.

[jsb]

So, if they would have given you the correct COBRA rates, your husband ABSOLUTELY WOULD NOT have taken the other job? If that particular health plan is so important, why is he changing jobs...or are there other reasons which you can continue to be greatful for? Or, maybe, would you have considered the AICPA plan sooner, in which case consider it now? If you are bent on retribution, see if you can get an attorney to take your case, but you may end up having to pay up front as this doesn't look like too strong a case (though I'm not an attorney). Administrative goofs happen. Even bad administrative practices happen. But unrealistic expectations happen, too, and you apparently had no real idea about the cost of health insurance. Make other arrangements for your health insurance and move on. Don't let this eat you up for the next couple of years.

[Guest mamaeck]

All I did was ask a simple question--not asked to be attacked personally. Ironically, I worked in Human Resources for 15 years, including benefit administration. However, I've been out of it for the past 5 years. Never once did I quote someone with incorrect rates. I would have never assumed that someone was taking a lay-off in lieu of a voluntary resignation or vice versa.

Yes, I have the option of going to the AICPA; however, my husband's dental insurance, and medical for that fact, is awesome. We barely paid any out of pocket expenses. Well, I'm not going to bore you with the details.

Any other insightful comments would be great.

[GBurns]

You said that your husband was "considering" not that he had taken the new job and left the old.

So the only thing that getting the wrong COBRA rates should do is to cause you to do some recalculations and reevaluations. These things happen. It is a part of life.

The only reason you would know if you have ever given out wrong rates, yourself, is if someone bothered to complain. Considering the low number of people who do take COBRA, it is very unlikely that anyone would have complained. The end result is that because of low numbers and few takers, there would be no complainers to have pointed out any errors that you made. So you really do not know for sure.

You were considering the change before you knew what the COBRA rates would be, so I also have to wonder about your rationale. If the COBRA rates are too high, why not just go straight to the AICPA plan? You already decided that that is where you would eventually go, and you made that decision before knowing what the COBRA rates would be, so it seems that the COBRA should not be that much of an issue.

But, it seems odd that the difference in rates could cause so much consternation. If what should be less than $500 per month (definitely less than $1,000) is causing all this grief, I wonder why he would be changing jobs.

[jsb]

Mamaeck, sorry you perceived my post as a personal attack. It may have been direct and perhaps blunt, but it is the same advice I would give to my own family member in a similar situation. Based on your self-reported experience in HR and benefits, it is even more perplexing that the erroneously low COBRA rates caught you by surprise.

You originally asked: "Is there anything I can do about this?" Yes there is.

1. Write an a letter to the employer explaining your situation and the error. Ask that they make good on the rates. Get a copy of any plan document governing this employer's plans. Read the documents to identify any other remedies you might have and to identify the appeals process. If your request for the lower rate is denied, carefully adhere to the appeal process and time deadlines and appeal the decision to the next level as determined by the plan. Continue to file every permitted appeal in a timely manner until there is nowhere else to go.

2. After all appeals are exhausted, take your case to an attorney with experience litigating this type of claim on behalf of claimants. Find out their success rate. If they tell you you don't have a case, check with another similarly qualified attorney. If they tell you that you don't have a case ... you might actually not have a case. If the attorney will take the case but wants payment up front, assess your situation and decide if it is worth the risk to pay the attorney and possibly lose the case. Also, determine what you might gain by pursuing the litigation and determine if it is worth the time and effort it will take.

3. If the above steps don't get you anywhere, move on.

In the interim, you will probably want to make some arrangement for your health insurance, either by paying the higher COBRA rate, accessing your AICPA coverage option, or purchasing private coverage. You perhaps strengthen any position you might subsequently assert by seeking to mitigate your loss exposure. Also, making sure that your family has comprehensive, affordable coverage should be a high priority.