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 onto it.
Know the basics
Before I get to some of the questions, here are some basic things that 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 death of a 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 late date even if they have a pre-existing health condition. However, if you have a significant break in your insurance coverage 63 or more full 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 that allows people from small groups to contact the insurance carrier directly and continue the 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.
Under COBRA, you only can be charged a 2 percent administrative fee. If you think you are being overcharged contact the Pension and Welfare Benefits Administration.
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 the group health plan is canceled, companies do not have to provide COBRA coverage. However, you can request a 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 enrolled in 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 to be part of a "control group" by the IRS, it may be possible for a person to obtain health insurance from another subsidiary in case of bankruptcy.
Q: How does one get a certificate of creditable coverage? Who issues it?
A: A certificate of creditable coverage shows how long you have had health coverage. This can be an important document to have if you need to enroll in a new group health plan or to get individual coverage. Your employer or current insurance company is required to give you a certificate of coverage free of charge once your coverage ends or whenever you need to show proof of coverage.
Q: 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?
A: No. The law applies to 20 or more people on the payroll. In this case the employer is required to offer COBRA. Religious organizations are exempt but are not prohibited from offering COBRA coverage.
Q: Is COBRA available in cases of voluntary separation?
A: COBRA is available upon any type of separation of employment (except for gross misconduct). This includes if you quit or your work hours have been reduced, causing a loss of coverage.
If you have additional questions or concerns about COBRA or HIPAA, try these sources:
The Centers for Medicare & Medicaid Services by clicking on www.cms.hhs.gov/hipaa1 or calling (877) 267-2323.
Pension and Welfare Benefits Administration by clicking on askpwba.dol.gov or calling (866) 275-7922.