Companies in the employee benefits administration business must have a monthly contest to see who can get caught trying to pull the meanest-and-dumbest denial of coverage stunt.
It’s early days still, but this month all the smart money is likely to be on North-Dakota-based Discovery Benefits. According to them, Discovery Benefits is not only “a national leader in employee benefits administration”, but it its mission involves “transforming the complexity of employee benefits administration with innovative solutions and extraordinary customer service delivered by empowered and knowledgeable employees.”
Keep that in mind as you read this story from The Colorado Springs Gazette:
La Rosa Carrington has more than enough to worry about. She’s a single mother with two teenage daughters, she’s fighting a type of leukemia that requires five days of chemo a month for four months, and she lost her job in May.
So the last thing she needed was news that her health insurance benefits would be terminated because she hadn’t paid her premium in full. The shortfall? One penny.
“My medical bills are coming in like locusts, and you’re holding up my benefits because of one red cent?” an incredulous Carrington said from her hospital bed last week as she recalled her conversation with a customer service rep at Discovery Benefits, an employee benefits administrator based in North Dakota.
The problem started after Carrington, 52, lost her job as an admissions representative with Alta Colleges and COBRA kicked in. Under the federal COBRA law, people who lose their jobs under certain circumstances can temporarily keep their group health insurance from their employer, but they have to pick up a larger share of their premium — in her case, a little over $471.87 a month.
However, under the 2009 American Recovery and Reinvestment Act, those who meet the eligibility requirements pay just 35 percent of the full COBRA premium. Because Carrington had not yet received a bill showing what her payment would be with the discount, she whipped out a calculator, figured out that she owed $165.15 a month and sent a check for that amount to Discovery Benefits.
But Discovery Benefits determined she owed $165.16, and last week, she received a letter from the company telling her she was short on her premium and her coverage “has not been reinstated with your insurance carrier(s).” The letter, however, did not tell her how much she owed. She called Discovery Benefits and was aghast when she heard the amount.
“I said, ‘Are you kidding?’ How am I going to pay you a penny’”?
Carrington said she talked twice to a customer service representative, who told her it was policy that the penny be received before the benefits could be reinstated. Write a check or send a money order, Carrington said the representative told her.
“‘I’m in the hospital receiving chemotherapy; I can’t get you a money order,’” Carrington said she told the rep. “If this is how you treat people, you need spiritual training.”
Carrington then asked to speak to a supervisor, who reiterated the company’s policy and wouldn’t budge on the penny. Carrington also threatened to take her case to the media, and that’s why she thinks the supervisor called her back with some good news: The supervisor had pulled out her own calculator, done the math — and determined that Carrington was correct.
The source of the problem is that Discovery Benefit’s software is programmed to round up every fraction of a penny. So, unlike everywhere else in the real world, when their computers compute 35% of $471.87 and come up with $161.1545, that becomes $161.16 instead of $161.15. Because they need to squeeze every fraction of a penny out of their customers in order to pay their executives the fat salaries they richly deserve for their innovative solution to the complex problem of fractional pennies.
Discovery Benefits, by the way, is disputing La Rosa Carrington’s account. Specifically, the part about the supervisor reiterating the company’s policy and refusing to budge on the penny until well after Carrington threatened to take her case to the media:
Suzanne Rehr, executive vice president for Discovery Benefits, offered a slightly different account. She wrote in an e-mail that COBRA software rounded up from $161.1545 — which is 35 percent of $471.87 — while Carrington rounded down, and said that “our staff member reached out to her supervisor and immediately received approval to pay the penny … due to the rounding difference.”
I guess readers will just have to make up their own mind about whose version they find more credible. But here’s a little question worth pondering. La Rosa Carrington is supposed to pay 35% of the $471.87 premium. The remaining 65% is being kicked in by some government agency under the 2009 American Recovery and Reinvestment Act. How much do you suppose they are being asked to pay?
I’ll bet you a whole penny that when that notorious COBRA software is asked to compute 65% of $471.87, and it pauses to ponder the figure of $306.7155, it doesn’t hesitate for one nanosecond before it spits out a demand for $306.72. So for every customer whose COBRA premium is subsidized under the ARRA, Discovery Benefits has carefully set up their systems to double-dip that fractional penny, to collect an extra penny per customer per month. An extra penny of pure profit. Per customer per month.
One thing’s for sure. Mere mortals can never hope to understand the corporate mind of the scavengers who operate on the fringes of the health insurance business.