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Florida Family Loses COBRA Coverage After Missing 2 Cents

Armen Hareyan's picture

COBRA health insurance limitations are known for professionals, but now by former employees who have lost their jobs and rely on COBRA coverage. John Dorschner, in today's Miami Herald, tells the story of Stan Rosen and his his battle for coverage rights when two cents payment went wrong.

Stan Rosen, a resident of Miramar, lost his job when his wife was six months pregnancy. He had to have a surgery and thought he could manage the cost because he had the COBRA health insurance. Then, by mistake, Stan paid two cents less than it was for November and the program manager informed him that he would cancel the policy. Rosen and his wife, Sabrina thought it would all end badly. Rosen immediately paid the two cents, but was only after he and his father called 100 times and The Miami Herald intervened, the company decided to keep his insurance coverage.

The case of Rosen is an extreme example of something that happens frequently throughout South Florida: laid-off workers have to undergo labyrinthine processes to maintain health insurance while insurers and their former businesses do not have the slightest interest in helping them beyond what is required by the State and federal laws, rightfully writes Dorschner.

COBRA has many limitations, Ron Pollack, the director of Families USA, an advocacy group for consumers in the health system in Washington tells the newspaper. ''It's a very important right that in reality does not mean much.'' In the above case it seems that the insurance company is trying to hurt people just for missing two cents.

The federal COBRA health insurance coverage requires companies with more than 20 employees to offer laid off workers medical coverage for up to 18 months, provided the employees pay the full premium cost.

COBRA insurance is not affordable

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In southern Florida, COBRA coverage can cost a family $1,200 dollars a month and many consider it too expensive and not affordable for most laid off employees. The government of President Barack Obama began last year to subsidize 65 percent of COBRA for a maximum of nine months. However, even in this case the cost is high and not affordable for many families.

Companies with fewer than 20 employees are covered by state law, but people who have had to comply with it, like Robert Dollar from South Dade, say that the state program is more complicated than the federal. "My COBRA has become a joke in bad taste,''said Dollar, who pays $ 712.34 a month just for his wife. "Basically you stay in the air.''

Federal law requires large companies to hand over their employees numerous documents on COBRA health insurance with all sorts of explanations. However, State laws do not require anything like that from the small businesses, as in the case of Dollar.

Health insurance providers look at COBRA coverage as a big headache. The problem is that most laid off people who are young and healthy tend to reject this type of health insurance due to the fact that they are healthy and this insurance is not affordable for them. Insurers say those who take COBRA coverage cost between two and five times more than the normal employee benefits, writes Jerry Geisel in Business Insurance.

The federal government imposes heavy penalties on insurers and businesses not follow the COBRA laws. For this reason most large companies outsource their COBRA business to other companies specializing particularly in this type of health insurance coverage. One of these companies, according to the Miami Herald article, is Ceridian, whose meter noted that Rosen had paid $ 334.97 on its own in November, instead of $ 334.99. Yet, the law provides one month grace period to pay the amount in full. However, Rosen did not know about the problem of two cents untill he receive the invoice at the end of the one month period.

In the reform bills that Congress is considering the House version has a clause stating that COBRA beneficiaries may retain the coverage beyond the 18 month period. It requires employees to continue COBRA coverage until beneficiaries get health care coverage through a new employer or until they become eligible for coverage through new state health insurance exchanges, which the legislation would establish starting in 2013.

To learn more about COBRA insurance visit dol.gov.