COBRA PREMIUM ERROR

[Guest PMCAWLEY]

Member had COBRA with former employer, since 6/1/2010.

Effective 1/1/2011, from open enrollment period/rate chanes , Member dropped the dental plan and had a rate increase to medical plan.

However when Member went to pay via the on-line COBRA payment for 1/1/2011--the old premium was still on-line and not the updated rates.

This continued for 2/1,3/1,4/1,5/1,6/1--all COBRA premium letters still stated premium error from carrier.

On 5/27, a staff member from the insurance broker for this group contact member to advised the premium was being billed in error via phone.

8/1 and 9/1 premiums payments was parsed out to cover the back premium due(1/1/11-7/31/11) coverage was terminated effect 7/31/2011 & Member was sent a $92.75 refund check.

My coverage should still be in effect--the premium should never have been parsed for back amounts--YOU never advised me in writing of the error and under Federal law, you can only go back and fix the error from the quarter when the error was discovered hence 6/1/2011 at best.

The Member still was under the impression given the 81 and 9/1 payments were accepted that coverage was still in effect--they did not know coverage was terminated until the refund check was sent 9/21/11 and the Certificate of Prior Coverage was sent 9/22.

Should the Member have coverage re-instated and just be back billed only to 6/1/2011?

Should premium have been applied as far back as 1/1/11 with the 8/1 and 9/1 checks from Member without advising the Member?

What are the legal issues here?

Thanks

[Guest sniffles]

In my opinion, the member was advised of the price increase. Just because the Cobra Administrator did not change the amount on their paysite does not mean that the member doesn't have to pay the arrears. At the same time, if this was one of my former employees, I would have sent them a letter informing them of the problem and giving them a date to get the payments up to date. I would have used the two payments to get the previous months paid up to the correct due amount, then made sure the Cobra participant knew exactly how much they would need to pay to be current.

Whether the paysite had the correct amount or not, the Cobra Participant was advised of the new Cobra amounts due. The Cobra Participant could have paid the additional premium by check mailed to the Cobra Administrator but they didn't.

As to Regulations concerning something like this, you should contact your State Department of Insurance.

[Chaz]

I generally agree with Sniffles analysis except that federal COBRA is administered by the DOL and not by state insurance departments.