Blue Cross and Blue Shield of Minnesota collected January premiums this week from about 3,500 people who canceled their 2016 coverage.

In most cases, the health insurer had received cancellation notices from subscribers in late December but couldn’t get them processed in time to prevent automatic withdrawals, said Jim McManus, a spokesman for Eagan-based Blue Cross.

Refunds for those 3,500 customers are coming this week, McManus said, adding that the insurer will cover what it called “reasonable overdraft charges” caused by the error.

“There was a processing delay with a small subset of our individual business,” McManus said in a statement. “Approximately 3,500 people who had recently canceled coverage with us still had their automatic monthly payment go through in early January.”

About 300,000 people in Minnesota buy health insurance coverage in the individual market. Shoppers in the market purchase policies for themselves and their families outside of an employer group or a government program.

The Star Tribune interviewed three people on Thursday who said Blue Cross withdrew one month’s worth of premium for policies they had canceled last month. In all three cases, consumers said their monthly premium costs exceeded $1,000.

“To be charged for something I’m no longer signed up for is frustrating,” said Nichol Hadler, a Minneapolis resident who said she switched health plans for 2016 due to a big jump in the cost of her Blue Cross coverage.

Most of the 3,500 people receiving refunds this week submitted cancellation notices to Blue Cross in late December, McManus said. But he wrote in an e-mail that “it’s possible that some earlier cancellations were caught up in this issue, unfortunately.”

In cases where Blue Cross received and processed cancellation notices on Dec. 29 or later, the company said refunds will come within seven to 10 business days of the notice being processed.

“The frustrating piece for me isn’t so much that a mistake happened, but the inability to fix it quickly,” said Steve Boland, a St. Paul resident who said he was told his refund will come in 10-14 days.

Boland was one of several subscribers who took to social media this week to complain about the withdrawals. Some also contacted the state Commerce Department, which regulates health insurers.

“We have been getting consumer calls about this,” the department said in a statement. “Unfortunately, callers are also telling us that there is a really long wait time when they call Blue Cross.”

Blue Cross said this is the peak time of year for calls.

Blue Cross has been the largest insurer in the individual market, with a market share of about 50 percent in 2014, according to figures from the Minnesota Department of Health. The company is raising rates in the market this year by 45 percent or more on average.

The policies can be bought from insurers or through the state’s MNsure exchange. The problem with automatic withdrawals at Blue Cross impacted both groups.

 

Twitter: @chrissnowbeck