July 6, 2010
La Rosa Carrington has more than enough to worry about. She’s a single mother with two teenage daughters, she’s fighting a type of leukemia that requires five days of chemo a month for four months, and she lost her job in May.
So the last thing she needed was news that her health insurance benefits would be terminated because she hadn’t paid her premium in full. The shortfall? One penny.
“My medical bills are coming in like locusts, and you’re holding up my benefits because of one red cent?” an incredulous Carrington said from her hospital bed last week as she recalled her conversation with a customer service rep at Discovery Benefits, an employee benefits administrator based in North Dakota.
The problem started after Carrington, 52, lost her job as an admissions representative with Alta Colleges and COBRA kicked in. Under the federal COBRA law, people who lose their jobs under certain circumstances can temporarily keep their group health insurance from their employer, but they have to pick up a larger share of their premium — in her case, a little over $471.87 a month.
However, under the 2009 American Recovery and Reinvestment Act, those who meet the eligibility requirements pay just 35 percent of the full COBRA premium. Because Carrington had not yet received a bill showing what her payment would be with the discount, she whipped out a calculator, figured out that she owed $165.15 a month and sent a check for that amount to Discovery Benefits.
But Discovery Benefits determined she owed $165.16, and last week, she received a letter from the company telling her she was short on her premium and her coverage "has not been reinstated with your insurance carrier(s)." The letter, however, did not tell her how much she owed. She called Discovery Benefits and was aghast when she heard the amount.
“I said, ‘Are you kidding?’ How am I going to pay you a penny’”?
Carrington said she talked twice to a customer service representative, who told her it was policy that the penny be received before the benefits could be reinstated. Write a check or send a money order, Carrington said the representative told her.
“‘I’m in the hospital receiving chemotherapy; I can’t get you a money order,’” Carrington said she told the rep. “If this is how you treat people, you need spiritual training.”
Carrington then asked to speak to a supervisor, who reiterated the company’s policy and wouldn’t budge on the penny. Carrington also threatened to take her case to the media, and that’s why she thinks the supervisor called her back with some good news: The supervisor had pulled out her own calculator, done the math — and determined that Carrington was correct.
Suzanne Rehr, executive vice president for Discovery Benefits, offered a slightly different account. She wrote in an e-mail that COBRA software rounded up from $161.1545 — which is 35 percent of $471.87 — while Carrington rounded down, and said that “our staff member reached out to her supervisor and immediately received approval to pay the penny ... due to the rounding difference.”
No matter which account is accurate, Carrington has her health insurance back for now, but she said it took three hours out of a day when she wasn’t feeling good, and upset her so much that she got a headache and had trouble sleeping. She’s outraged, and when she gets well, she wants to push for a policy to prevent people going through what she went through.
There are, indeed, others who have had the penny-owed experience, said June Harryman, supervisory benefits adviser for the federal Employee Benefits Security Administration regional office in Kansas City.
“We’ve seen it before,” said Harryman, whose agency works on COBRA issues. “It’s not the first, and it won’t be the last.”
It turns out that employers that carry the coverage or their benefits administrators can legally waive a penny, or any shortage less than 10 percent of the premium, and she’s not sure why many don’t.
“It costs more to mail the notice than get the penny back,” she said.
But if the company decides it wants that penny, the person had better pay up, Harryman said.
For Carrington, the issue wasn't whether she could afford to pay a penny, but the principle.
"I'm so outraged and angry about this kind of pettiness in a billion dollar industry," she said.