Harrison staff must deal with insurance end
With Harrison College’s abrupt closure comes an unexpected consequence for its former employees: The immediate end of their health insurance coverage.
When the 11-campus, for-profit college announced its closure last Friday, it told employees they would be able to continue their health insurance coverage under COBRA. The Consolidated Omnibus Budget Reconciliation Act allows former employees to continue coverage by paying both the employer and employee portions of health insurance premiums for a limited period.
But that offer was made in error, according to Harrison College CEO Craig Pfannenstiehl, who sent an email to former employees on Monday.
Harrison’s self-funded health care plan was terminated as of last Friday and won’t pay claims for care delivered after that date, Pfannenstiehl said. The college has stopped contributing to the fund, he said.
Pat Sullivan, executive vice president at Hylant Group, has decades of experience in the insurance industry. This situation could have played out in three different ways, he said Tuesday.
If one location were closing but the remainder of the business were still operating, employees from that closed campus would have been allowed to continue coverage under COBRA, he said.
Or, Sullivan said, if the business closure had been carefully planned, the owners could have allocated money to allow workers to continue health insurance coverage while they searched for other jobs.
In this case, the entire company is closed : a decision that seemed rushed or forced rather than planned. That triggered the third scenario: Loss of insurance coverage.
Though it might seem possible for ex-employees to continue their health coverage as long as they paid both premium portions, it’s not that easy, Sullivan said.
A COBRA premium “doesn’t necessarily cover all the costs,” he said. Premiums are set based on the average employee’s claims, not on the costs incurred by workers with the highest claims.
Without a company sponsor, the health insurance plan document also ceases to exist, Sullivan said. That’s true whether it’s a self-funded insurance plan or a standard insurance company policy.
Anthem, the third-party administrator that processed claims paperwork for Harrison, won’t be able to pay claims without that guiding document, he said.
“COBRA is only as good as the master plan document,” Sullivan said.
Nick Mehdikhan, PHP’s chief sales and marketing officer, agreed that Harrison College’s closure is following an inevitable script.
“COBRA is the continuation of an employer health plan,” he said. “When an employer closes up shop immediately, the (health care) plan ends.”
Any assets left in the plan must be used to pay legitimate claims for care delivered up to that date before anyone can pull money out for another purpose, Mehdikhan said.
The former Harrison employees can go online to the health care exchanges to search for coverage, both men said. Or, Mehdikhan said, they can go online to the Northeast Indiana Association of Health Underwriters, which will help them find a local adviser.
“When this type of stuff happens, people feel like they are left out in the cold,” he said. “But this is a source of solid, professional advice.”