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Two Cents Short, Company Tried to Cancel COBRA Benefits

 This is one of our editors’ picks from our ongoing roundup of Investigations Elsewhere.

As the recession pushes more Americans to rely on COBRA, the federal program that lets laid-off workers pay to  keep their employer-provided health insurance for up to 18 months, The Miami Herald’s John Dorschner looks at how well the program works through one particularly trying case.

The stimulus included an initial $24.7 billion to subsidize the cost of premiums paid by laid-off workers for their COBRA benefits. But Dorschner found that above and beyond the cost of premiums, people eligible for the COBRA program can struggle to keep their benefits.

Exhibit A is Stan Rosen.

Rosen enrolled in COBRA after he lost his job at a hotel in Miami Beach. He needed an operation, and his wife was pregnant. But in November, he mistakenly underpaid his health insurance bill by two cents, and the company that administers his insurance, Ceridian, responded by cancelling his COBRA policy—even though he paid the outstanding two cents as soon as the balance showed up on his next bill.

Rosen eventually had his coverage reinstated, but only after he and his dad called the company "about 100 times" and the Herald got involved, Dorschner writes. The article quotes a Ceridian spokesman, Joe Brown, as saying that the company was required to follow the letter of the law "or the company would be held liable."

"The normal person would have given up long before I did," Rosen’s father told Dorschner. Added Stan Rosen, "It’s just a crazy system."

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