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I hope this is the right place to ask this, but if not let me know and I'll go away.

About 6 months ago I left a W-2 position to do independent consulting. Since then, I have been using my previous employer's COBRA plan. It's very expensive, and so I have been looking at other options.

However, I just received a letter from the COBRA management company yesterday (4/26) that says that my premiums were increased a significant amount (35%), and that not only do I have to pay the increased premium amount for the upcoming month, but that the premium was actually increased 2 months ago and nobody told me, and that I need to pay the remaining balance by 4/30 (yes, 4 days notice). This means that I am expected to produce twice as much as I was originally told, and I was only given a few days notice, otherwise they will terminate my coverage on 5/1.

I talked to the COBRA provider, and they said that there was nothing they could do. They said that they only just found out about the increase as well, and that this happens often because the insurance company is allowed up to 60-days after the fact to notify them of the increase. They said that there was nothing they could do about it, that they were following the law to the letter, and that the law does not allow them to continue my coverage if there is a balance, even though I was not given and proper notice.

If I had been given notice of this in advance, I would have found other coverage and terminated the COBRA coverage as soon as possible. However, I was not aware, and I continued to pay the agreed upon price, with the reasonable expectation that my insurance was in good standing.

Are they really allowed to do this? Are they lying to me to cover their own tails? It's obviously not fair that I this bill for more than double my original premium dropped in my lap with a few days notice, and the customer support person agreed that it wasn't fair, but he said that I had no recourse. I could either pay or my coverage will be terminated period.

This seems like it could be a common scenario. Has anyone run into this before and could offer any advice? Should I get a lawyer?

Thanks

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  • I was looking for the answer to your question because I appear to have a similar problem. I left my RN job at CCF "Cleveland Clinic of Florida" last year and have had COBRA at a rate of $422.00/month.This evening I opened by bill and found they raised my premium to 695.00/month for single coverage. My answer is Obama Care.That is what I plan to do tomorrow. My understanding is that you can speak with a live person and they have many different plans, companies and options. Premiums are based on income. I've spoke with several people that were happy with it and some others that thought it was to
    – user24346
    Dec 30, 2014 at 5:58

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I just asked my wife (who sells insurance, but does not administer cobra) and she says all of that is in bounds of the law to the best of her knowledge.

Maybe the reason you are notified so late is the 60 day rule applies when the provider tries to raise the rates. Between the provider negotiating with the government, the employer and other regulation, that 60 days can go by fast. So while it seems retroactive, you just don't know how long they have been talking about the raise.

35% is a pretty big jump, but not unheard of. The provider is allowed to raise the rates once per year, and the company that administers the plan can charge up to 2% on top of that.

Your best option is to do what you are doing and get your own coverage from a different broker. It will certainly be cheaper. Also, if you are by yourself and can't form a group (and some states allow groups as small as two) you might look into a trade association that offers insurance.

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  • Thanks @MrChrister. I'm definitely going to go with a different provider in the next month or so. I already have the application filed and the price is less than half of my new COBRA premiums. Yeah, they may have been talking about it for a while, but my main concern is that I was only notified at the last minute, and they only gave me 4 days to make up those serveral months of "underpayment". In fact, I have to go down to the post office or fedex and mail it overnight (or close to it) just to make sure that they have the check in hand by Friday morning.
    – Mike Mooney
    Apr 28, 2010 at 14:09
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    It sucks, but it is allowed. Wifey also made a comment that she wished cobra didn't exist, since it often isn't a good deal for folks. Just allow for a continuance in coverage as you change providers (or do not allow companies to turn you down for pre-existing conditions)
    – MrChrister
    Apr 28, 2010 at 15:10

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