The setup
An employee's last day is June 30. HR terms them in the ben-admin system on June 28 — early, even. The termination goes out on the next EDI file. Textbook execution.
The July bill arrives with the employee on it, full premium. So does August's.
| Bill month | Should bill | Carrier billed | Overcharge |
|---|---|---|---|
| July | $0.00 | $320.09 | $320.09 |
| August | $0.00 | $320.09 | $320.09 |
| Total riding the bill | $640.18 | ||
Why "we sent the term file" isn't proof
Between your ben-admin system and the line on the carrier's bill there are more failure points than most people want to count: the file generation window, the carrier's load schedule, their translator's handling of the term reason code, a rejected record quietly parked in an error queue, a member matched on the wrong identifier. Sending the file proves you sent the file. The bill is the only document that proves the carrier applied it.
The cruelest failure mode is the cycle cutoff: the carrier generated July's bill on June 24 — before your June 28 term ever arrived. The July charge was "correct" when printed. The carrier's process assumes the July overcharge will come back as a credit on the August bill. Sometimes it does. When it doesn't, nobody's process is watching for its absence — you can't see a credit that isn't there.
The COBRA complication
Now add the wrinkle that trains analysts to ignore exactly these lines: some termed employees are supposed to keep appearing — they elected COBRA. An analyst who has been burned by flagging a "termed but billed" employee who turned out to be a legitimate COBRA continuant learns the lesson fast, and the lesson is the wrong one: termed people on the bill are probably fine.
They're not the same thing at all. A COBRA continuant should appear with the COBRA rate (typically 102%), often under a separate billing division, and only after an election. A missed term appears at the active rate, in the active group, with no election on file. Distinguishing them takes thirty seconds per line — if you have the census, the election data, and the will to do it 300 times a month. That's the part that doesn't scale by hand.
What it adds up to
Terminations run 2–3% of a group's population per month in most industries. Every one is a chance for this leak, and unlike a tier error, the overcharge is the entire premium. Two missed terms a month on a mid-size group, caught two months late each, is a five-figure annual leak — all of it recoverable if caught inside the retro window, most of it gone if found at renewal. (See the retro-window guide for why timing is the whole game.)