COBRA payment check bounced for third time!

WAS · June 2003

I have a former employee who is currently on COBRA and has written my company a rubber check for the third time in 8 months. Each time she does this it costs my company $25 to process the insufficient funds. Most recently, the check for her May COBRA coverage was submitted 8 days late on May 8 (It was due April 30). The check was returned to us on June 6, so she is now well beyond the 30 day grace period which would normally allow us to terminate COBRA coverage. Does anyone know if we can demand to be reimbursed the $25 for each bounced check? Can I terminate her COBRA coverage since her payment is now over 30 days late? Any other advice?

Don D · June 2003

Ask your Controller to find out from the bank what your rights to collect the processing fee are. I suspect you can. I don't advocate rubber checks; but, I'll bet the ex-employee is struggling financially and is trying to meet the COBRA demands and has, shall we say, a cash-flow problem. I'm sure she doesn't enjoy getting notice of the bounced check. Try to work with her, perhaps to set up another type of payment, perhaps a postal money order, or bringing in cash. The harsher side of reality is, though, that you can terminate the coverage if payment is not received according to the terms of your notification.

Pearce · June 2003

You indicate that the payment for May was submitteed "late" on May 8th. You have to allow a 30-day grace period from the due date and during that grace period the payment would not be considered late. Although payments made during the grace period could cause claims to be denied.

I would give the person a limited period of time (15 days perhaps) to make the NSF payment good and I would not accept that payment by personal check, especially after more than one NSF payment.

I would request reimbursement for the fee charged to the employer's account.

Be sure that your COBRA notice states that should a periodic payment be made later than its due date but during its grace period, coverage under the Plan will be suspended as of the due date and then retroactively reinstated (going back to the due date) when the periodic payment is made.

Rockie · June 2003

I would advise former employee that due to the expenses you have incurred as a result of these NSFs, that you will no longer be able to accept personal checks, so please submit either by cash (in person) or money order. I am sure that you can ask for the $25.00 per check charge to be reimbursed, but if they can't pay their premium, probably cannot pay the fee either.

If they refuse to do this and checks continue to bounce, then you would be within your rights to cancel the coverage if it is not paid within the grace period. I would, however, put this in writing in a certified letter to the former employee.

Don D · July 2003

And if it bounces again, tell her the status of her coverage is the same as YOUR screen name.....WAS.

Balloonman · July 2003

Pretty sharp Don! xclap
DJ The Balloonman

Lola815 · July 2003

Maybe in the future you should only accept cash or cashier checks. For us if the check is late, they get canceled. Whenever someone elects COBRA coverage I tell them when the money is due and that they have a 30 day grace period and if their health insurance is important to them they better not wait until the the end of the month because of reasons like slow mail, or bounced checks. Good luck.

COBRA payment check bounced for third time!

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