What are the details of the COBRA coverage?
By Michelle Singletary
Sunday, August 4, 2002
Washington Post
In response to a recent column, dozens of people from around the country wanted to know more about continuing their health coverage following the loss of a job.
Sadly, we live in a country where the two are linked. Lose your job and you face losing your health coverage or paying the equivalent of a mortgage note to hold on to it.
Before I get to some of the questions, here are some basic things you need to know about your health-insurance options should your employment status change:
• Under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, workers who have been terminated (except for gross misconduct) or lose their health coverage because of reduced work hours can maintain group coverage for themselves and their dependents for 18 months. Coverage can be extended up to 36 months under some circumstances, such as a divorce, disability or the death of the policyholder.
• Under the federal Health Insurance Portability and Accountability Act, or HIPAA, people who have group health coverage can"t be denied group health insurance at a later date even if they have a pre-existing health condition. However, if you have a significant break in your insurance coverage -- 63 or more days in a row -- you could lose this protection.
• Once you exhaust your COBRA coverage, you may be able to purchase other health insurance under HIPAA.
• Some states have conversion requirements, meaning that you must be offered the option to convert to an individual policy once your COBRA coverage ends. A conversion is basically an individual policy with the same carrier but with no pre-existing medical restrictions.
• Many states have laws that allow people to continue their insurance if they work for a company with fewer than 20 employees. For example, Florida has the Florida Health Insurance Coverage Continuation Act, which allows people from small groups to contact their employer"s insurance carrier directly and continue their coverage. The law is almost identical to COBRA. One exception is that with the state law, the carrier can charge as much as a 15 percent administrative fee. So the size of the fee can depend on which law you continue your coverage under.
• Under COBRA you have to pay the full health-insurance premium, including the part that your employer used to pay. You also must pay a 2 percent administrative fee, but only 2 percent. If you think you are being overcharged, contact the Pension and Welfare Benefits Administration (PWBA).
Now here are readers" questions, with answers provided by the Centers for Medicare & Medicaid Services, the Department of Labor and the Office of Health Plan Standards and Compliance Assistance, which is part of the PWBA:
Q Can you continue coverage if your employer goes bankrupt?
A No group health insurance, no COBRA. Once their group health plan is canceled, companies do not have to provide a plan to connect your COBRA coverage to. However, you can request an HIPAA policy that will take you with any pre-existing medical conditions. But be forewarned, these policies can be very expensive.
Also find out if you are entitled to "special enrollment" privileges. If it has been less than 30 days since you lost your health coverage, you are eligible under HIPAA for special enrollment in your spouse"s health plan. However, this option is available only if your spouse is already covered by a separate health-insurance policy.
Additionally, there is something called "control groups," which are subsidiaries owned by a person or a company. If a company is deemed by the Internal Revenue Service to be part of a control group, it may be possible for a person to obtain health insurance from a subsidiary in case of bankruptcy.
I work for a small company with 30-plus employees, but fewer than 20 are in the medical plan. I have been told we do not qualify for COBRA. Is that right?
No. The law applies to compan
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