Do I Qualify for a Refund on my COBRA payments?
Have I Overpaid my COBRA Premiums?
If you qualify for the ARRA premium reduction under COBRA, you should be paying only 35% of the normal premium. Chances are, your application for the reduction was not approved immediately. Maybe you were lucky and had your application approved immediately and the reduced payment will go into effect immediately. If that is the case, you should consider buying some lottery tickets. If you are not so lucky, but fall into the majority, you most likely paid the normal premium for the first few months until your COBRA administrator calculated the reduced payment rate. They are, in my experience, very slow to process anything.
Let's say you got laid off prior to May 31, 2010. Let's even say that you received your COBRA election package within the legally required time frame and you elected COBRA coverage. At that time, you were told the amount of your monthly premium and told that you might qualify for the ARRA premium reduction. In the meantime, you paid the full premium while your eligibility was confirmed or denied. After approval, you were given the new, reduced calculation. Consequently, there should now be a credit on your account. But sometimes there isn't a credit showing by your COBRA administrator. So you might be wondering if you should get any type of a refund. The answer is YES. Now we must determine how much money you are owed.
How Much Should My Refund Be?
Say you were laid off effective May 5, 2010 and paid your normal COBRA premium through the month of August. The following is an example we can use:
- For May paid the total premium of $407.00
- For June paid the total premium of 407.00
- For July paid the total premium of $407.00
- For August paid the total premium of $407.00
On August 11, 2010, you were notified that your application has been approved and at that time you should have been told what your reduced rate would be. In the above example, the reduced rate should be $142.45. According to the COBRA guidelines, the reduction takes effect in the FIRST month AFTER the event (you being laid off) or in this case, June. So, for June, July and August you have overpaid $264.55 each month for a total overpayment of $793.65. This is the amount owed to you and in some cases, may not be automatically refunded to you. Not all COBRA administrators are created equal and not all previous employers are that willing to give you your money back promptly.
How Do I Get My Money Back?
As soon as you get your approval notice, contact the COBRA administrator and inform them that you expect a timely refund on your overpaid account. They should still have your payment for August in their possession and they are able to credit your account for the next month and most of the month after that. The rest of your payments have probably been forwarded to your employer so that they could pay your insurance premiums as they came due. Follow up with a phone call to the administrator instructing them again that you would like your August payment (example) applied to the next 2 months. Make sure to ask for a case number. That is the only way you can be sure that the phone call is documented.
This contact to the COBRA administrator should preferably be made by e-mail, this way you have a copy of what was sent. Most likely, they will send back a response with a case number telling you that the employer will have to refund the money to you and you will have to request the refund from the employer. They will also tell you that they have contacted the employer with the information regarding the amount of the new, reduced payment and how much money should be refunded.
Do NOT wait for the employer to act! You are probably unemployed and need your money. Send your former employer a copy of the e-mail sent to you by the COBRA administrator along with a request for a prompt refund of your overpayment. This, too, should be sent via e-mail to the Manager of the Human Resources Department. At this point, the Human Resources Manager may send you a confirmation of receipt of the information and should provide you with an expected turn around time for processing, which should be no longer than 7-10 business days. If you have not received your refund in 7-10 days, immediately access the Department of Labor at www.dol.gov/ebsa/cobra.html.
The Department of Labor is responsible for taking care of any problems that you have regarding COBRA. It is much easier to have them intervene than wait forever for money that you need. When you access their website, they will have a "Contact Us" page. Send them an e-mail requesting their assistance in getting your refund. Tell them that you have requested a refund from your employer and they have not sent it in the promised time frame. Attach the e-mails you sent to the COBRA administrator as well as any emails to your employer, including their responses. This will expedite the process and they will have all of the information needed to process your request. Make sure you give them your name, address, phone number and COBRA account number. It is NOT necessary to send them your social security number. If they need it, they will request it at a later time. Believe me, the Department of Labor is responsive to these requests. Don't be surprised if, within a few days you receive a phone call from them saying that they have sent a letter to your former employer. Employers seem to move much quicker when contacted by the Department of Labor. Those contacts make them uncomfortable, for some reason.
Finally, I hope that this helps you receive your COBRA refund as soon as possible and that you have luck in finding a new job if you are still unemployed.