Insurance Options for Those Who've Lost Coverage

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You could find yourself without health-care coverage for any number of reasons, including retirement, being fired, relocation, divorce or your employer's decision to terminate such benefits.

So what do you do? Here are the steps that you can take to ensure that you maintain coverage.

Assess the Situation
If you are married, the first thing to check should be whether you can get coverage through your spouse.

This may well be the most cost-effective option for maintaining health coverage. If group health coverage is available, you qualify for special enrollment. This allows you and your dependents an opportunity to enroll in a plan for which they are eligible, regardless of normal enrollment periods. Be aware, though, that to qualify, enrollment must be requested within 30 days of losing eligibility for other coverage. After you request special enrollment, your coverage will begin on the first day of the next month.

COBRA
The Consolidated Omnibus Budget Reconciliation Act of 1986 gives employees who do not qualify for Medicare the right to continue their health coverage. You qualify following a reduction in hours and voluntary or involuntary termination of employment for reasons other than gross misconduct. For a spouse, additional reasons include the covered employee becoming entitled to Medicare, divorce, legal separation and their death.

Employers with 20 or more employees are normally required to provide coverage under COBRA. Many states also have similar laws, so check with your state insurance commissioner to see if coverage is available. To be eligible for COBRA coverage, you must have been enrolled in your employer's health plan and the health plan must continue to be in effect for active employees.

Under COBRA, you are liable to pay the entire premium including the amount of the contribution made by your employer together with a maximum 2% administrative fee.

Normally, you will be covered for a maximum of 18 months, but coverage can be discontinued if you become entitled to Medicare, do not pay the premiums, your former employer drops health coverage or you join another health plan. A covered employee's spouse who would lose coverage due to a divorce may elect to receive continuation coverage under the plan for a maximum of 36 months.

You, your spouse and your dependents have the individual right to decide among various options for continuing health coverage. You may enroll in your spouse's plan while one of your dependents may elect COBRA coverage through your former employer's plan if, for instance, they have an illness at the time.

If there is no longer a health plan because the company went bankrupt or closed, there is no COBRA coverage available. If there is another plan offered by the company, you may be eligible to be covered under that plan. Collective bargaining agreements may provide for continued coverage for union members.

The Employee Benefits Security Administration, 866-444-3272, enforces and administers the rights and protections for health plan participants and their beneficiaries.

Private Health Plans
The Health Insurance Portability and Accountability Act of 1996 provides protection when you need to maintain health coverage between jobs or limit exclusions for pre-existing conditions under a new health plan.

There are a number of different plan options, including PPO-style plans; high-deductible health plans compatible with health savings accounts; preventive and hospital plans that combine coverage for preventive care with catastrophic coverage for services like inpatient hospital care and outpatient surgery; and an optional dental PPO plan. Premiums vary for the different types of plans, allowing consumers to choose the plan or product that best fits their needs.

According to the EBSA, HIPAA guarantees access to individual insurance policies and state high-risk pools for eligible individuals if you:

  • had coverage for at least 18 months, most recently in a group health plan, without a significant break;
  • lost group coverage, but not because of fraud or non-payment of premiums;
  • are not eligible for COBRA continuation coverage or have exhausted COBRA benefits;
  • are not eligible for coverage under another group health plan, Medicare, or Medicaid, or have any other health coverage.
  • The type of health coverage you are guaranteed may differ from state to state. Check with your state insurance commissioner's office if you are interested in obtaining individual coverage. Some state programs have income limits, while others, such as Connecticut, provide subsidies up to a certain income but also make plans available to individuals above the income threshold.

    Coverage for Children
    EBSA says that children in families who do not have health coverage due to a temporary reduction in income, for instance due to job loss, may be eligible for the State Children's Health Insurance Program (S-CHIP), a federal/state partnership that helps provide children with health coverage.

    States have flexibility in administering S-CHIP programs. They may choose to expand their Medicaid programs, design new child health insurance programs, or create a combination of both. To find out more about the program in your state, call 1-877-543-7669 or visit InsureKidsNow.

    Coverage for Retirees
    For retirees who are not yet 65, there are individual plans available directly from insurers such as Aetna (AET) who also offer a well-known individual plan to AARP members and their families. Aetna says it focuses on making plans affordable while also providing valuable benefits to as many people as possible.

    If you qualify for Medicare, you are not eligible under COBRA, so you must find the right coverage. With the exception of end stage renal failure, for which special coverage may be available, all other retirees, including those undergoing cancer treatments, should be able to obtain access to a Medigap or Medicare Advantage guaranteed issue plan.

    Remember that your spouse or dependents may still be able to obtain coverage under the provisions of COBRA as outlined above.
    Aetna says that premiums for Medicare Advantage plans are based on health care costs and government reimbursements in the member's ZIP code, not on an individual's health status.

    Additional information may be found at the Department of Labor.

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