Does your COBRA plan charge $20 "convenience fee" to make a payment? (employees, credit card)

[kyle242]

Has anyone ever been on COBRA plans after leaving work? When I changed my job, I incurred one month gap before my new plan took effect during which I had my dental work done. So got yesterday COBRA packet from my employer's plan administrator TaxSaverPlan, I went to their website. I enrolled and when I tried to make online payment I noticed they were going to charge me $20 convenience fee on top of my $40 dental plan. What the hell? That's a rip-off on top next level after utility providers who charge $2-3 for "convenience".

I filled out the printed form, grabbed my own envelope, check and post stamp. They did not even bother to mail in a return envelope. I had a nice little walk to my nearest blue box to avoid $20 fee.

[johnp292]

I would have done the same thing.

In fact, any time any company tries to charge me a fee of any amount for making a phone or online payment, I usually say forget it and mail them a check.

[ged_782]

Employers are permitted by law to charge participants in a COBRA plan the full amount of the premium, plus an "administrative" fee not to exceed 2%. When I was on a COBRA plan years ago, my employer did just that, and it applied even if you mailed in a check.

As long as the $20 doesn't exceed 2% of the premium, they can do that, and they can also charge it if you mail them a check. If they are waiving the administrative fee if you mail them a check, then consider yourself lucky. Seems odd they would only charge for an online payment, though.

[Rabrrita]

A "convenience fee" can be charged (in excess of the administration fee) if the plan normally bills via checks but made a credit or debit card option available to you for your convince. Normally, this is handled through a third party payment center and that's why the fee is charged. There are about 10 states that do not allow such fees so it also depends on where you live. You can avoid such fee by using a payment method that does not incur additional fees to the service provider. (as an FYI, it's actually cost less to process a physical check than it does for the fees credit card companies an processors charge)

[kyle242]

Originally Posted by Rabrrita

A "convenience fee" can be charged (in excess of the administration fee) if the plan normally bills via checks but made a credit or debit card option available to you for your convince. Normally, this is handled through a third party payment center and that's why the fee is charged. There are about 10 states that do not allow such fees so it also depends on where you live. You can avoid such fee by using a payment method that does not incur additional fees to the service provider. (as an FYI, it's actually cost less to process a physical check than it does for the fees credit card companies an processors charge)

My plan tried to charge $20 flat admin fee on top of whole premium+2%administrative fee for any online payment, credit/debit or ACH electronic check did not matter. They would waive if I authorized auto-draft from my bank though. It is just damn stupid.
Don't forget they have to pay payroll for employees who process checks which may cost more than 3rd party charging processing fee. Merchandisers get charged interchange fee from banks typically around 2% + $0.10 for credit cards.