It's not the first time someone has lost coverage because they underpaid by a penny. And it likely won't be the last.
Posted by Karen Datko on Thursday, July 8, 2010 2:10 PM

Jobless and undergoing chemotherapy, a Colorado leukemia patient learned that she no longer had health insurance because she underpaid the premium by a penny.

The story of La Rosa Carrington, 52, was relayed by the Colorado Springs Gazette. What's even more remarkable is, this isn't the first time an insurance company or benefits administrator has dropped coverage over a lousy cent.

"We’ve seen it before," June Harryman, a supervisory benefits adviser for the federal Employee Benefits Security Administration, told the Gazette. "It's not the first, and it won’t be the last."

Here's how this came about: Carrington lost her college admissions job in May and was eligible for COBRA, which entitled her to continue her health insurance if she picked up the premium. However, the federal government, as part of economic stimulus, is paying 65% of the COBRA premiums for some laid-off workers. Carrington hadn't yet received a bill, so she calculated that she'd owe $165.15 and sent it in.

The benefits administrator for her former employer figured she actually owed $165.16 and sent her a letter telling her she would not be insured because she underpaid. A company representative told her on the phone that she needed to send a 1-cent check or money order if she wanted to be covered. The Gazette said:

"'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 told the reporter she appealed to a supervisor and threatened to go to the media. Three hours after she first placed a call, she was told she was insured again.

Of course, the Gazette asked the company for its side:
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 $165.1545 -- which is 35% 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."

John Biwer, president of Discovery Benefits, told another news outlet that his company called the insurance company and hospital to fix the problem. “She was never in jeopardy of losing coverage over this," he said.

Whatever the case, apparently the 1-cent deficit didn't need to become an issue. Harryman told the Gazette that benefits administrators can disregard a shortfall of less than 10% of the premium and keep coverage in place, and she isn't sure why they don't do that.