In a recent article, I described what COBRA insurance is and my experiences obtaining it. One of the biggest complaints I had about COBRA was the sign-up process. Signing up for COBRA insurance had to be initiated by my employer, and it was a paper process to boot. This meant there was a lag between when I signed up and when I received proof of insurance.
Unfortunately, after wading through the sign-up process, the rest of my experience with COBRA didn't get any easier. A paper bill was mailed to me each month and I was supposed to send in my check. I couldn't find cancellation instructions anywhere on the documentation I received, and it wasn't possible to initiate the cancellation process online either.
Billing mismatch was just the beginning
As I stated in my previous article, I needed COBRA only for the period between April 15 and May 1, when my insurance at my new employer was set to kick in.
However, my state's Department of Administration (DOA) bills by the month, so they took the first check I sent them and applied it to the second half of April; then they applied the rest to the first half of May. The first bill I received was for the remainder of May.
I know that somehow the DOA knew that I had insurance through my new job because they sent me a letter to that effect. However, the letter indicated that the State wouldn't cancel my insurance; I was responsible for that.
I called the number on my DOA invoice and, after a long hold, spoke to someone who gave me instructions for canceling.
I had to draft a letter and mail it to the address on my COBRA bill, along with some enclosures. Here's a copy of what I sent in case it is useful to other people.
My COBRA cancellation letter
To Whom It May Concern,
I am writing in regard to COBRA benefits for account #xxx. Since I had health coverage through my new employer as of May 1, 2015, I would like to request the following:
- That my COBRA benefits be discontinued effective May 1, 2015,
- That the balance of $xxx already applied to my account for the month of May be refunded to me, and
- That the balance due for the remainder of May be canceled.
Enclosed please find three pieces of documentation in support of this request:
A copy of my most recent DOA billing statement, showing $xxx applied to my account for April 15 to April 30, 2015 (prorated), an additional $xxx applied to my account for the month of May, and a $xxx balance due for the remainder of May.
An offer letter from my new employer indicating eligibility for medical benefits/health insurance effective May 1, 2015.
Verification of my new insurance effective May 1, 2015.
I only needed COBRA benefits from April 15 to April 30, 2015. I called DOA member services and spoke to someone who said that a letter with proof of my new insurance would be sufficient to cancel COBRA coverage and receive a refund for the amount that was applied to my account after my effective cancellation date. The check for my refunded balance can be mailed to:
Address Line 1
Address Line 2
If you need to reach me regarding this request, I can be reached at the address above, by phone at xxx-xxx-xxxx or by email at xxx.
Other billing issues arose too
Since the COBRA plan I opted for was the exact same plan I had been on at my employer, I thought that my physical therapist had processed my claims without any issue during this time. However, in early May, I received a bill from them for over $350. Whoa!
Fortunately, there was an email address for their insurance processor on the invoice. So I exchanged a few emails with her and provided my COBRA information, and she was able to resubmit the claim and process it without a hitch. Since I had already made the co-pays when I went in for my sessions, I didn't have to pay anything additional. Whew!
When I got the invoice in the mail, I knew that I had insurance that was valid during the time of my visits. However, I thought that the process of resubmitting the claim was going to be a lot more difficult than it turned out to be (like this reader's experience with medical billing). Your mileage may vary, obviously.
Another lag: Waiting for verification of my cancellation
Time ticked by, and I received a bill for June. (For all the lags during the sign-up process, they were pretty prompt about sending my monthly invoice! However, because of the timing, I knew the two items had crossed paths in the mail. Just as I was getting nervous and on the verge of calling the Department of Administration again, I got confirmation in the mail that my COBRA had been cancelled with an effective date of May 1, as I requested.
Is the check actually in the mail?
The confirmation included verification that I had a negative balance for the amount that had been applied to my account for May 1 through May 15. Unfortunately, there was no check included with the updated invoice. I assume the check is in the mail?
Ha. I received the updated invoice recently enough that I feel comfortable I'm in a holding pattern for now. Though if I don't get a check soon, I will call back and follow up. Once I receive it, I'll plunk my refund back into my savings.
Who is best suited for COBRA? Other benefits and drawbacks
If you are leaving your job to pursue self-employment, you may be able to get health coverage that is as good as or better than COBRA for less money. The packet you receive in the mail with the sign-up materials articulates this pretty forcefully! You are definitely encouraged to pursue other options.
If you have other options when searching for insurance, such as your spouse's or parents' plan, that may also be a better choice than COBRA. And as one HR rep who posted in the comments of my previous article pointed out, if you are fired for gross misconduct, you may not be eligible for COBRA. So you'd have to find another option in that event. According to another commenter, if you have an FSA and opt for COBRA, you may have additional hurdles and headaches coming your way.
However, COBRA was the right solution for me; so while it may not be the good side of quitting, I imagine it's an option that is not going to be eliminated, even with the Affordable Care Act (ACA) on the scene.
If you or someone you know ever used COBRA, what was the cancellation process like? How did the claims get handled before proof of coverage was received? Was it a paperwork nightmare? Share your stories in the comments below!