by MaxHerr » Sun May 16, 2010 04:56 am
If you work for an employer with 20 or more full-time employees (or the equivalent) and are enrolled in the employer's group health insurance plan, you are covered under the federal legislation referred to as "COBRA", passed in 1985, during the Reagan administration.
COBRA is often spoken of as if it is an insurance company or policy, but it is not. People, including members of Congress and Presidents of the United States, news reporters, and others who should know better (like some medical insurance companies), frequently say things like, "When you have COBRA insurance . . ." which is entirely inaccurate.
COBRA applies to three particular "persons": employees, their spouses, and their dependent children (including stepchildren, adopted, or foster children) if they are enrolled in the employer's group health plan. These are known as "qualified beneficiaries." You may be able to enroll your dependent parents in your employer's group health plan, but under COBRA, they could be excluded from continuation, because COBRA does not mention dependent "parents".
What COBRA does is allow you to continue as a member of the employer's group health insurance (medical, dental, vision, but not life or disability income) when you lose your eligibility as a member of the group. That could happen when you (or your spouse or parent, if you are covered under their plan) quit, are fired or laid off, or have your work hours reduced. It could happen if your spouse (or parents) gets a divorce (or legally separated), dies, or becomes eligible for Medicare, or, as a dependent child, if you are lose your dependent status by reason of age or marriage. These are the six "qualifying events" specified in the COBRA legislation. If your termination is for "gross misconduct" (stealng employer assets, destroying employer equipment, property, or tools, etc.), it is not a qualifying event for you or your spouse or dependents.
Depending on the qualifying event, the continuation privilege is 18 months or 36 months. If the qualifying event has to do with the employee specifically (termination of employment or reduction in hours), then everyone who was enrolled (employee, spouse, children) can continue for up to 18 months. If the qualifying event is spouse or dependent related (divorce, separation, Medicare, or loss of child dependent status), the continuation period is up to 36 months. There is also a special 29 month continuation period for persons who were "disabled" at the time of their qualifying event. ["Termination" can also include getting a promotion into a class of employees not covered by the group health plan, and the new class does not have a health insurance benefit -- such as from a union hourly position into a management salaried position.]
The hard part about COBRA is the cost. And this is the most confusing part for some people. When you continue your group insurance by electing COBRA continuation, you pay the entire cost (100%) of the group insurance coverage (and can also be assessed up to 2% for the employer's administrative expense). Many folks have gone from $0 to $1,000 for family coverage, because their employer was paying the full cost. Some folks think the $50 or $100 that comes out of their paycheck for their group health insurance is the total cost. COBRA is often an eye-opening experience.
This is what causes many to say things like, "I was laid off last week, and they told me I could buy the COBRA insurance, but I couldn't afford it. I used to pay $200 a month for the whole family for group insurance, but that COBRA insurance is $800. I don't know why they make it so expensive." The truth is, the employee didn't know what the total cost was. He was paying $200 per month and the employer was paying $600 per month. When you continue insurance under COBRA, you pay both your employee's share and your employer's share. A rude awakening for many workers and their families.
In September 2009, for the first time in almost 25 years, Congress authorized a plan for persons involuntarily terminated (not one who quits) between September 1, 2008 and March 31, 2010 that requires employees to pay just 35% of the cost, and the employer pays the remaining 65% and gets a credit against his payroll taxes for doing so. On April 15, 2010, Congress authorized an extension to May 31. 2010. This assistance has allowed many people an opportunity to remain covered who might not have been able to afford the 100% price tag. But if you are unemployed and you don't even have whatever the 35% is, there is no plan to provide the money. That's why it's always been the hardest part of continuation under COBRA for most beneficiaries.
You normally have only 60 days from the date of the qualifying event to elect COBRA continuation. An extension will be allowed if you do not receive the required notice about your COBRA privilege at the time you are terminated. And your eligibility to continue ends when you enroll in a new group insurance plan or your continuation period expires, whichever comes first.
HIPAA, the "Health Insurance Portability and Accountability Act" was passed in 1996, during the Clinton administration. Originally advertised as, "You'll be able to take your health insurance with you when you leave your job," it doesn't exactly work that way. What HIPAA does allow you to do is join a new employer's group health plan at the earliest possible moment, and to limit or prevent any "preexisting conditions" exclusions that could apply to you or your spouse or dependents under the new insurance plan. To be eligible for the protections afforded under HIPAA, you must go to work for a new employer who offers a group health insurance plan within 62 days of leaving your former employer.
You must receive credit for each day you had coverage during your former employment (up to 365 days) toward the preexisting condition exclusion period, which cannot be longer than 12 months. A "break in service" of 63 days or more means the new employer does not have to count any of the prior days of "creditable coverage". States are permitted to enact laws that change these rules slightly, to make them more favorable to employees, so you may need to check with your state's Labor Department (or Commission or Board) to see if there are different rules in your state.
You must be given a certificate of creditable coverage by your former employer (or the insurance carrier/administrator) that shows your date of hire, date of termination, and date of enrollment in the group health insurance plan. Your new employer is required to accept the certificate and credit your days of prior coverage toward the exclusion period for preexisting conditions.
Preexisting conditions can include anything for which you received advice, diagnosis, care, or treatment for any medical condition in the six months prior to your enrollment date in the new employer's health insurance plan. Certain conditions, such as pregnancy, may not be considered preexisting, and coverage must be extended to newborn children and newly adopted children if they are enrolled in the plan within 30 days of that event, and do not have a 63-day or longer break in coverage in the future.
Even though these laws have been in effect for nearly 15 years or more, there is still much confusion about how they work. Employees are often the ones who are least knowledgeable about COBRA and HIPPA, and especially those who have limited English language skills. When you seek advice from a coworker, it could be very poor or even totally wrong. If your employer's HR department cannot answer your questions, you can always seek help from a knowledgeable insurance professional or the US Department of Labor.
If you have questions about COBRA or HIPAA, please feel free to ask them here.
I have a handout I have prepared on COBRA for the students in my insurance classes. If you'd like a PDF copy (24 kb), please send me a "pm" or email. Unfortunately it cannot be posted here as a PDF, and the JPG file is too big to post, too (525 kb). I also have a PDF document about HIPAA from the US Department of Labor (2,200 kb) that I can email to you on request.
COBRA is often spoken of as if it is an insurance company or policy, but it is not. People, including members of Congress and Presidents of the United States, news reporters, and others who should know better (like some medical insurance companies), frequently say things like, "When you have COBRA insurance . . ." which is entirely inaccurate.
COBRA applies to three particular "persons": employees, their spouses, and their dependent children (including stepchildren, adopted, or foster children) if they are enrolled in the employer's group health plan. These are known as "qualified beneficiaries." You may be able to enroll your dependent parents in your employer's group health plan, but under COBRA, they could be excluded from continuation, because COBRA does not mention dependent "parents".
What COBRA does is allow you to continue as a member of the employer's group health insurance (medical, dental, vision, but not life or disability income) when you lose your eligibility as a member of the group. That could happen when you (or your spouse or parent, if you are covered under their plan) quit, are fired or laid off, or have your work hours reduced. It could happen if your spouse (or parents) gets a divorce (or legally separated), dies, or becomes eligible for Medicare, or, as a dependent child, if you are lose your dependent status by reason of age or marriage. These are the six "qualifying events" specified in the COBRA legislation. If your termination is for "gross misconduct" (stealng employer assets, destroying employer equipment, property, or tools, etc.), it is not a qualifying event for you or your spouse or dependents.
Depending on the qualifying event, the continuation privilege is 18 months or 36 months. If the qualifying event has to do with the employee specifically (termination of employment or reduction in hours), then everyone who was enrolled (employee, spouse, children) can continue for up to 18 months. If the qualifying event is spouse or dependent related (divorce, separation, Medicare, or loss of child dependent status), the continuation period is up to 36 months. There is also a special 29 month continuation period for persons who were "disabled" at the time of their qualifying event. ["Termination" can also include getting a promotion into a class of employees not covered by the group health plan, and the new class does not have a health insurance benefit -- such as from a union hourly position into a management salaried position.]
The hard part about COBRA is the cost. And this is the most confusing part for some people. When you continue your group insurance by electing COBRA continuation, you pay the entire cost (100%) of the group insurance coverage (and can also be assessed up to 2% for the employer's administrative expense). Many folks have gone from $0 to $1,000 for family coverage, because their employer was paying the full cost. Some folks think the $50 or $100 that comes out of their paycheck for their group health insurance is the total cost. COBRA is often an eye-opening experience.
This is what causes many to say things like, "I was laid off last week, and they told me I could buy the COBRA insurance, but I couldn't afford it. I used to pay $200 a month for the whole family for group insurance, but that COBRA insurance is $800. I don't know why they make it so expensive." The truth is, the employee didn't know what the total cost was. He was paying $200 per month and the employer was paying $600 per month. When you continue insurance under COBRA, you pay both your employee's share and your employer's share. A rude awakening for many workers and their families.
In September 2009, for the first time in almost 25 years, Congress authorized a plan for persons involuntarily terminated (not one who quits) between September 1, 2008 and March 31, 2010 that requires employees to pay just 35% of the cost, and the employer pays the remaining 65% and gets a credit against his payroll taxes for doing so. On April 15, 2010, Congress authorized an extension to May 31. 2010. This assistance has allowed many people an opportunity to remain covered who might not have been able to afford the 100% price tag. But if you are unemployed and you don't even have whatever the 35% is, there is no plan to provide the money. That's why it's always been the hardest part of continuation under COBRA for most beneficiaries.
You normally have only 60 days from the date of the qualifying event to elect COBRA continuation. An extension will be allowed if you do not receive the required notice about your COBRA privilege at the time you are terminated. And your eligibility to continue ends when you enroll in a new group insurance plan or your continuation period expires, whichever comes first.
HIPAA, the "Health Insurance Portability and Accountability Act" was passed in 1996, during the Clinton administration. Originally advertised as, "You'll be able to take your health insurance with you when you leave your job," it doesn't exactly work that way. What HIPAA does allow you to do is join a new employer's group health plan at the earliest possible moment, and to limit or prevent any "preexisting conditions" exclusions that could apply to you or your spouse or dependents under the new insurance plan. To be eligible for the protections afforded under HIPAA, you must go to work for a new employer who offers a group health insurance plan within 62 days of leaving your former employer.
You must receive credit for each day you had coverage during your former employment (up to 365 days) toward the preexisting condition exclusion period, which cannot be longer than 12 months. A "break in service" of 63 days or more means the new employer does not have to count any of the prior days of "creditable coverage". States are permitted to enact laws that change these rules slightly, to make them more favorable to employees, so you may need to check with your state's Labor Department (or Commission or Board) to see if there are different rules in your state.
You must be given a certificate of creditable coverage by your former employer (or the insurance carrier/administrator) that shows your date of hire, date of termination, and date of enrollment in the group health insurance plan. Your new employer is required to accept the certificate and credit your days of prior coverage toward the exclusion period for preexisting conditions.
Preexisting conditions can include anything for which you received advice, diagnosis, care, or treatment for any medical condition in the six months prior to your enrollment date in the new employer's health insurance plan. Certain conditions, such as pregnancy, may not be considered preexisting, and coverage must be extended to newborn children and newly adopted children if they are enrolled in the plan within 30 days of that event, and do not have a 63-day or longer break in coverage in the future.
Even though these laws have been in effect for nearly 15 years or more, there is still much confusion about how they work. Employees are often the ones who are least knowledgeable about COBRA and HIPPA, and especially those who have limited English language skills. When you seek advice from a coworker, it could be very poor or even totally wrong. If your employer's HR department cannot answer your questions, you can always seek help from a knowledgeable insurance professional or the US Department of Labor.
If you have questions about COBRA or HIPAA, please feel free to ask them here.
I have a handout I have prepared on COBRA for the students in my insurance classes. If you'd like a PDF copy (24 kb), please send me a "pm" or email. Unfortunately it cannot be posted here as a PDF, and the JPG file is too big to post, too (525 kb). I also have a PDF document about HIPAA from the US Department of Labor (2,200 kb) that I can email to you on request.
Add your comment