COBRA - Do Better, Jack!

We interrupt this blog for a cautionary and personal tale regarding health care insurance in the U.S. - specifically the predatory practices by at least one player deep within the system. This will be a long tale, and I apologize in advance for the length. The summary: If you lost your job and are using the ARRA subsidies to help pay COBRA premiums, be diligent about canceling this coverage once you are employed again. When I say diligent, I mean do not trust anyone involved in the process - be careful, and get everything in writing. 200906300858.jpgBackground: in the U.S., you pay a small portion of the actual health care insurance premium while your employer pays the lion's share each month. The Consolidated Omnibus Budget Reconciliation Act of 1986, or COBRA, provides you with the opportunity to remain a part of your employer's group health plan following termination of employment - but you must pay the entire premium. This unwelcome shock to your finances can come at the worst time, as a laid-off employee can find themselves paying three times what they're used to paying at precisely the moment they lose their source of income.

Earlier this year, Congress passed the American Recovery and Reinvestment Act (ARRA) of 2009 - part of these provisions included a subsidy for partial COBRA health care premiums if you have been laid off from your job. The idea is to "restore" the employer's share of the premium for up to nine months' coverage. With so many losing their jobs since October of 2008, this is a welcome lift. I should mention that the previous employer does get hit with additional costs, as they are billed for their share of the premium for a terminated employee. Employers and employees must opt-in to the ARRA program.

My previous health coverage ended in February, whereupon I secured COBRA and began paying ADP my premiums as directed. Since I started paying the before ARRA took effect, I paid full-price. The ARRA subsidies were then applied to future premiums...and herein lies the tale.

I accepted full-time employment at my new job on 1 June. The following is a timeline written after an otherwise wasted day, in hopes this will help others from wasting theirs:

5/14 - Send email - first notice to ADP of intent to cancel coverage, as I've accepted full-time employment. Asked procedures to cancel and how to get refund of premiums paid.

5/15 - Bride calls CSR #1, who says " Just send or fax us a letter saying you want to cancel coverage, and you're all set!"

6/4 - Letter faxed as per instructions.

6/10 CSR #2 - Tells me I needed to have faxed information as of 5/31 to get it cancelled for June. Nevertheless, she promised cancellation as of 6/1.

6/24 CSR #3 - Apparently, someone overruled CSR #2 and I have to pay for June anyway. More worrisome, I'm on track to pay July as well. For some reason, my account status is Active. CSR #3 announces a cancellation as of 6/30, and issues a refund for July and August premiums. I vow to get June back somehow, since any collection of COBRA subsidy under ARRA while employed could lead to a penalty - basically, ADP is compelling me to defraud the U.S. Government by applying an ARRA subsidy against COBRA premiums for any date after 1 June!

6/30 ADP responds to my 5/14 email. Announces July has been paid. If I want to avoid paying August, I am invited to dance this dance once more. Amazingly, they admit to having my request for cancellation - but want it again. I've bolded salient portions below and masked dollar figures - I have not fixed the broken English:

"We have reviewed your account as per the request below. Our heartiest Congratulation to you for your new Job! The account is paid in full through 07/31/2009 and we have a credit of $xxx.xx in the account. In reference to your email regarding early cobra termination, we have received a written request on 06/04/2009 to cancel coverage effective 06/01/2009.

"Please be informed that you would need to post mark the letter by the last day of the previous month for the changes effective from the 1st day of the next month (that is, by 05/31/2009 for the plan changes effective from 06/01/2009).Since we received the request on 06/04/2009, we are unable to terminate the coverage and we have already forwarded the premium amount to the insurance carrier.

"However, if you wish to cancel cobra coverage effective 08/01/2009, you would need to send us a plan termination request letter via mail or fax, stating the effective date from when you would like to cancel cobra coverage, along with the account number in the letter and the letter needs to be signed by yourself and your spouse. You would need to post mark the letter by the last day of the previous month for the changes effective from the 1st day of the next month (that is, by 07/31/2009 for the plan changes effective from 08/01/2009)."

In English: Start over, and get it done today or we're stealing your August premium as well.

6/30 (8:00 am) Called CSR #4 and asked for supervisor. Bride standing over me now, weapons at the ready.

6/30 Poobah #1 is horrified. "Not proud of my company today," says she. She promises to fix all, but first has to talk with previous CSRs, then would call back "this morning." Never heard from her again.

6/30 (1:00 pm) Called CSR #5. Claims Poobah #1 made it a priority case, and they'll be back to me "tomorrow." (Interestingly, he says he has a note in the case file that Poobah #1 called me to convey this information already. Nice.) Problem: tomorrow is 7/1, at which point, they can then charge for me for August since they didn't hear from my by 6/30 - according to the email. Not accepting this answer, as the only written correspondence indicates the need to re-submit paperwork by 6/30. "Sir, I am trying to help you." This is where I utter the phrase, several times, "Do better, Jack!"

6/30 (1:30 pm) Transferred to Poobah #2. He assures me the research department will review the June issue and resolve in 48 hours. He is confident July and August will be refunded. I now refuse to hang up the phone until he sends me an email to this effect. He tells me this is not possible, he can only email people within ADP."Do better, Jack." He tells me to respond to the morning's email and he will reply with the info. Ten minutes later, he claims technical difficulties have prevented the email from going out, and can I give him 24 hours to send it again? Yes, he really said that. "No. Do better, Jack." He implores me to grant him more time, as he is messaging his supervisor, Uber Poobah #1. I ask to speak to that person, but - you guessed it - that is simply not possible. They will not come to the phone. I have reached the pinnacle of ADP Customer Service: all decisions occur above Poobah #2, where men and women labor in a client-free workplace.

By 2 pm, I have an email saying July and August will be refunded. Still wrestling over June, but mercifully, I let Poobah #1 hang up the phone.

My concern is not with my refund - I am employed and have the resources to eventually resolve this matter. And I will let the government know I did not intentionally defraud them out of a June premium subsidized with ARRA funds. My concern is those who cannot make their own hours and spend a day with ADP. What is happening to the hourly employee, (who, for example, may have received this end of month email after business hours today)?

What is happening to those who cannot spend hours on the phone with a call center?

What is happening to those who were supposed to be helped by ARRA? If they are still unemployed, they are still receiving health care coverage. But if they resume employment - they are likely being drained of their premium refund by ADP. ADP's choice was to apply the ARRA funds to future premiums rather than refund the money and bill me. This decision ensured their fees for several months, as their efficient CSRs effectively stonewalled me for a full six weeks. The less persistent may give up - and these souls will then find themselves charged a 10% fee and told to return the subsidy for health coverage they tried to cancel.

To ADP, and I suppose United (see previous) or any business struggling to survive today, I guess the message is simple: Do Better, Jack.