Wednesday, July 31, 2019

Timing is *Everything*

Suzy, a referral from another client, called me last Friday, asking to set up an appointment to discuss health insurance. We agreed on yesterday afternoon (July 30), and boy did we luck out with that.

First, the backstory:

Suzy's divorce was finalized last November, and it appears that her divorce decree did not require her ex-husband to continue her insurance. So she called his employer to find out about COBRA (it's a fairly large company) and was told that they were in the midst of some kind of audit, but were able to tell her how much the premiums would be ($700+/month - Yikes). They also told her they'd be in touch with the paperwork.

That never happened.

But her medical bills kept being covered, so no harm, no foul, and no $700 a month out of her bank account.

Until early June, when her doc called to say that [insurance company] had denied the latest claim because she no longer had insurance with them.


So she called to find out the story, and as best she could tell, her ex- had neglected to formally tell HR that they were divorced, and apparently hadn't realized they were still dinging his paycheck for her coverage. Eventually, he connected the dots and off she went at the end of May.

Except that neither his employer nor the insurance company had bothered to tell her. So she called HR (several times) and was told they'd send her COBRA paperwork ASAP.

It was at the point of the initial call in early June that the clock started ticking for the employer:

"An employer that is subject to COBRA requirements is required to notify its group health plan administrator within 30 days ... Within 14 days of that notification, the plan administrator is required to notify the individual of his or her COBRA rights."

So basically that's 44 days,  which in this case was July 15th.

Remember I told you the July 30th date would be important?

Well, it's also relevant for another meter that started running June 1: the ACA Special Open Enrollment clock. That is, losing group coverage constitutes a triggering event for Special Open Enrollment, but one must exercise that option within 60 days. Which would have been .... today.


So now we have some issues and challenges: first, since she's never received any COBRA paperwork, it appears she's the subject of a severe COBRA violation, which doesn't bode well for her ex-husband's employer. We decided to table that for the nonce, since our primary concern was getting her covered. To that end we had several choices:

An ACA plan (for which she is not subsidy-eligible), a Short Term Medical plan, or "Dave's Plan." We got online and started looking at ACA plans. As expected, they were pricey, and since she is in good health, the guaranteed issue and pre-ex features weren't all that critical.

For a number of reasons I wasn't too thrilled with the STM plan options.

Then I had her read our post on Dave's Plan, and we actually got to speak with him during this process. He had an online presentation for her, and they agreed (as did I) that this plan was the best fit for her needs. The "catch" is that, since it's underwritten it will take a few days to confirm enrollment and there's always the (very slight) chance that she'd be turned down. Dave (an experienced insurance pro himself) and I agreed that Suzy should also "pull the trigger" on an ACA plan just in case.

So we did that, and then saw that the plan would be effective August 1, 2019.

Wait, what?

My understanding has always been that:

"When you sign up 1-15 you are not covered until the First of the following month. From the 16-31st the plan starts the 1st of the second month"

And since we were signing up on the 30th, how is that even possible?

Now, it's not that big of a deal in this case, since we probably won't even need the plan, but I'd sure love to know how that happened.

Oh, and the COBRA violation? Well, COBRA is jointly enforced by the IRS, the DOL and CMS, and penalties for violating its requirements include:

• Excise tax penalties of $100 per day ($200 if more than one family member is affected)
• Statutory penalties of up to $110 per day under the Employee Retirement Income Security Act (ERISA)
• Civil lawsuits
• Attorneys' fees and interest

Once the dust has settled on Suzy's new coverage, we'll be contacting DOL to get that ball rolling.

A long day, indeed.
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