The Internet bubble was at its most distended when Kacey Hawker left a secure job to join a Bellevue dot-com about a year ago. Her>"/>
The Internet bubble was at its most distended when Kacey Hawker left a secure job to join a Bellevue dot-com about a year ago. Her employer, Drivewire.com, was an auto-parts retailer and would-be online "community" for fancy car enthusiasts. Though it was soon to go down in the first wave of Internet wipeouts, Hawker never knew just how bad off her company was until she woke up last May on the way, way wrong side of her bed.
In the simple act of getting up one morning, she managed to dislodge a piece of disk in her spine, which began pressing on a nerve. She needed surgery, and after receiving a pre-authorization from her health insurer, Premera/Blue Cross, she underwent the procedure. A couple of months later, however, Hawker got a rude shock: Blue Cross had rejected her $25,000 claim, saying that she wasn't covered during that period. Upon further investigation, Hawker discovered that Drivewire had stopped paying its health insurance premiums back in May—without letting her, or the other employees, know.
"I don't understand how they could be so devious and not disclose anything when they knew I was going in for surgery," she says. Bryan Parks, Drivewire's founder and executive vice president, maintains he was unaware that the company's premium check had bounced. "There was no ill intent," he says.
In June, Hawker, 38, was put on a standby, or temporary, layoff to recover from her surgery, but "standby" soon turned into permanent, and Drivewire is now more or less defunct. Hawker found herself facing an enormous medical bill as well as unemployment. As far as she knows, no other Drivewire staffers were as unlucky on the medical front, though she says others were left with unpaid wages and expense reports. Hawker has since returned to her former, more stable employer, Kirkland fitness equipment-maker Precor.
As the dot-com dissolution continues, it's unclear how common the Drivewire experience is. "Although we see this from time to time, we haven't seen any increases lately," says a spokesperson for Group Health. "It's not a trend." When employers hit hard times, health care is "generally something we see continued until the very end," says Ned Sander, an executive at the insurance broker Armfield, Harrison & Thomas (or AH&T).
Sander manages health insurance plans for 400 local high-tech companies through a local industry trade group, the WSA (formerly known as the Washington Software Alliance). Asked whether he has encountered many failing companies that have fallen behind on their insurance premiums, Sander replies, "I'd say there's less than 20 I can think of off the top of my head where that's been a problem."
At some companies, Sander says, "directors and officers have personally paid premiums in the last month when [the firm was] really out of money." Bryan Parks of Drivewire claims that he paid the company's final paychecks out of his pocket. "I exhausted every possibility, including my own."
Amazingly enough, your boss is under no obligation to notify you when he or she fails to pay the insurance bill, according to Sandy Mealing, spokesperson for the state Office of the Insurance Commissioner. Neither is an insurance company required to tell you—until it's too late. Mealing says that's because the insurer's contract is with the employer, not you.
Insurers typically give employers a 30-day grace period to get their premium check in, and "a lot of these companies will certainly exercise that to the furthest extent," says Steve Uno of AH&T. "There's a lot that are waiting for funding, so they'll hold off paying the premium." That 30-day window allows an employee to rack up at least a month's worth of medical care before finding out they're no longer covered. For most people, that's not much; for Hawker, it turned out to be a small fortune.
After months of struggle and negotiation, Hawker has managed to work out a deal with Premera/Blue Cross under which she'll be able to get a few months of retroactive coverage, limiting her out-of-pocket expenses for the surgery to about $7,000. "I'm ecstatic about that," she says. "But I still feel incredibly burned."