Friday, January 28, 2011

Ceridian's 2-cent Moment

As you may have read, cancer patient Ron Flanagan lost his insurance coverage because his premium payment was $.02 short.

Problem is, that's only part of the story, and as we've seen before, the press rarely looks beyond the popular narrative to see if, perhaps, there's more to the story.

And there is.

First, a quick primer on how COBRA works: when one leaves a COBRA-compliant employer (generally, any company with 20 or more full-time employees) one is entitled to stay on that employer's group plan for up to 18 months, as long as one pays the premium (plus a nominal handling charge) fully and on time. Since tracking this can be a time-consuming (and potentially legally treacherous) course, many employers out-source COBRA compliance to one of the many services which specialize in it. Ceridian is one such service. They are required to follow the law, which they (apparently) did.

I spoke briefly with a Ceridian spokescritter yesterday, who told me that once they were informed of the situation by both Mr Flanagan and the press, they persuaded the employer to reinstate coverage. Unfortunately, the rest of our conversation was off the record. I had hoped to confirm several other pieces of information, but Ceridian doesn't appear anxious to "set the record straight."

Which is a shame, really, because there's some obvious problems that should be addressed by pretty much all the parties involved. I'll start with Ceridian, which really should have more human-centric systems in place to alert them that a "de minimis" (that is "short") payment shouldn't automatically trigger a cancellation. Perhaps this was at the request of the employer (as seems probable), but in this age of automation it doesn't seem far-fetched that this could simply generate an electronic "red flag."

The problem then becomes "what's a de minimis" payment: 2 cents? 2 dollars? 20 dollars? 200 dollars? When you start making exceptions, you open yourself up to a lot of litigation.

Next, let's turn our attention to the Flanagan's. One can certainly sympathize with their plight, and it's easy to make a simple mistake on a check. But they were notified of the shortage and apparently did nothing to confirm that their coverage was still intact until they got to the doctor's office. If someone's suffering a life-threatening illness, doesn't it make sense to make sure that all the i's are dotted and t's crossed? From the accounts that I've read, it appears that Ceridian attempted more than once to alert them to the potential loss of coverage.

It's still not clear to me how this all played out "behind the scenes." For example, was this a self-funded plan, and is that perhaps relevant? Was it fully insured, and thus the cancellation generated by the carrier? Certainly, Ceridian had no reason to arbitrarily cancel the policy: for one thing, they weren't paying any claims; for another, it cost them whatever fees they were being paid on Mr Flanagan's behalf.

Should Ceridian have been more pro-active before issuing the cancellation? Perhaps, but COBRA law and regulations are murky at best, and it's often prudent to simply follow the letter of the law. That's not to excuse anyone, but to acknowledge reality.
blog comments powered by Disqus