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Avoiding Gaps in Insurance With COBRA

Posted on: December 6th, 2012 by Kristen Marie

Dear COBRA Insurance Direct -

I was recently laid off. It was a little less than two months ago and I can’t figure out what I need to do to make sure I don’t have a gap in coverage or if that even matters. I am lucky and can get on my husband’s insurance plan but I won’t be able to sign up for three months. I have read that having a gap in coverage isn’t ideal because if by any chance I develop a condition, that condition will likely be excluded from future policies. Can you help? I only have a few days to decide and I have to come up with $1400 if I use COBRA since I will have to make the retroactive payments.

- Confused About Gap Coverage

This is a really great question and something that concerns many people who are transitioning between jobs or health plans. You are completely right that you do not want to experience a gap in coverage because that is when you open yourself up to major liability if you develop any major medical conditions that could potentially be excluded in the future. What is a gap? A gap under HIPAA is a period of 63 days or more. Under the law you can not be excluded if you do not experience a lapse of greater than 63 days.

In your situation since your lapse in coverage will total 5 months before you are on your husband’s plan, you will want to ensure you have some type of interim coverage. This could be COBRA or could be a less expensive option like short term insurance or high deductible insurance. These plans will ensure you don’t have a lapse in coverage but will not cost a lot of money. Just be aware that if you go with a plan like this, you will essentially need to pay out of pocket for any treatment since the plans don’t normally kick in for anything that isn’t an emergency.

Turning 27…What are my insurance options?

Posted on: November 7th, 2012 by Kristen Marie

Dear COBRA Insurance Direct -

I have been very fortunate the past 27 years of my life to be covered under my father’s health insurance policy. Not only have I been covered, my parents have continued to pay the health insurance cost for me and never once asked that I send them a check. Now on the verge of reaching my 27th birthday, I have to find my own health insurance plan. I currently am self-employed and trying to launch my own internet business.

In terms of a plan – I am pretty healthy but like to go to the doctor when something comes up. My insurance plan with my Dad was awesome – gym membership, mental health services, any doctor, any hospital – you name it, the plan had it. I don’t need all the same bells and whistles, but I would like something that offers good coverage and that I can depend on. Do you have any ideas on where I should start looking for insurance? Is COBRA a good choice? I have a pretty limited budget.

Thanks -

Trying to avoid my 27th birthday

Dear Trying to Avoid My 27th Birthday,

First of all it is great that you are thinking about this ahead of time. All too often people don’t think about this until it is too late and they have already let their coverage lapse. In your situation you have a few options for health insurance that could help you maintain the kind of coverage you want at a price you want. It’s a good idea to explore each one and find the plan that best suits your needs. Here’s an overview of your options:

  • COBRA Insurance: Under the current laws, it sounds like you would likely qualify for COBRA given your father’s plan covers at least 20 full time employees. Under COBRA you could maintain the exact same insurance plan you’ve had for up to 36 months. The main advantage of this – you get to keep the great plan your Dad has. The main disadvantage – it will probably be really expensive. Under COBRA you will be responsible for paying the entire premium yourself plus a 2% administration fee. To find out the exact amount, contact the health insurance company and inform them you are losing your dependent status and want to know how much it will cost to continue their plan with COBRA. Based on the plan details you shared, likely this will be $400 or more monthly.
  • Private Insurance: The second option to explore is a private insurance plan. Likely since you said you are healthy and you are young, you can find a pretty affordable plan with good coverage for around $125-$150 per month. These plans are offered by major companies like Blue Cross, Aetna, and others and are able to offer pretty affordable care to people who are healthy. Under these plans you will be able to go to the doctor, fill prescriptions, etc. but they likely won’t cover everything your Dad’s plan did. Find out more about private plans, coverage, and prices.
  • Trade or Alumni Organization Insurance: Depending on your industry and your educational past, you may be able to find an affordable health insurance plan through these organizations. Many alumni associations offer health insurance and many trade organizations also do. One of the most popular is the Freelancer’s Union. They provide coverage to lots of people in your situation.

No matter what you decide, it is incredibly important that you maintain your insurance company. Having a lapse in care can disqualify you from future plans and make future insurance much more expensive. Moreover you never know when illness will strike and you will need your health insurance.

Ten Essential COBRA Questions

Posted on: November 5th, 2012 by Kristen Marie

looking at an insuranc policy

Understanding COBRA insurance is important for anyone whether they are employed, unemployed, insured, or uninsured. Knowing your options and the basics will ensure you are prepared in case you find yourself in a situation in the future where you have to make difficult decisions about health care and COBRA.

What is COBRA

COBRA, short for Consolidated Omnibus Budget Reconciliation Act, is a law that was passed in 1986 to let people continue to use their health insurance plan after job loss. Under this law, employees who meet the criteria for enrollment can continue to use the exact same health insurance plan they had when they were employed. In most cases it lasts for 18 months and will cost 102% of the whole premium. Additionally the benefits extend to children, spouses, and any other dependents.

Who can use COBRA

Under the law there are three conditions that must be met in order to use COBRA. First the health plan that the employee was on must cover at least 20 full time employees (or their part time equivalents) and must still be active. Secondly, the employee must have lost their insurance due to involuntary or voluntary job loss without gross misconduct. This could include quitting, being laid off, or even retiring. Finally, the person signing up for COBRA must be an eligible beneficiary which could include dependents and spouses. Additionally children and spouses can qualify for COBRA in the event of divorce, death, Medicare qualification, and loss of dependent status.

How many months can I use COBRA

In most cases COBRA insurance can be used for 18 months and it starts on the day you would have lost coverage. In some cases, COBRA can be extended to 36 months if you have a disability or second qualifying event. Additionally children and spouses can use COBRA for 36 months in the event of death, divorce, loss of dependent status, and Medicare qualification.

What happens to my insurance if I get divorced?

In most cases, as long as your spouse’s plan meets the qualifying requirement, then in the event of divorce you will qualify for COBRA for up to 36 months. It is your responsibility to inform the health insurance provider and sign up for COBRA. Failure to do this right away can result in not being eligible for benefits. In most states you are also eligible for COBRA in the event of legal separation.

How much is COBRA

Under the law COBRA insurance costs 102% of the premium. This includes the entire premium – both what you paid and what your employer paid – plus a 2% administration fee. You can usually find this amount listed on the COBRA enrollment paperwork or you can calculate it yourself.

Do my children get to use COBRA

As long as the covered employee qualifies based on the plan type, then children are eligible as well for COBRA coverage. The law and benefits extend to the entire family. If you learn you are not eligible for COBRA, then you can look into state CHIP plans that may cover your children.

What can I do if I can’t afford COBRA?

There are multiple options for people who can’t afford COBRA and the best option for you will depend on your health status, age, and personal situation. The most common options that people consider are private insurance plans, government or community insurance plans, and finding a trade/alumni insurance plan. Private plans can usually save people up to 65% on the monthly cost and actually offer very similar coverage to COBRA.

Where do I sign up for COBRA?

Signing up for COBRA is a relatively easy process. To sign up you will need to get the COBRA election form form your former employer and complete it by the due date on the form. You will also need to pay the premium to start the insurance. It is retroactive back to the day your coverage was lost and will cover any expenses incurred during that time.

How will my coverage change with COBRA?

Your coverage will not change at all with COBRA because you are keeping the exact same plan. In some instances if the company you worked for changes aspects of their plan, then your plan will also change just like it would if you were still employed.

Can I use COBRA if I quit?

Yes. COBRA insurance works for voluntary and involuntary job loss which includes when someone quits their job. Many people are unaware of this option and miss out on potentially using COBRA for their health plan.

Making Sure Preexisting Conditions Stay Covered

Posted on: November 1st, 2012 by Kristen Marie

Dear COBRA Insurance Direct,

Although I am currently employed, I am fearful that my company may soon go out of business and I have a pretty serious preexisting health condition that would likely disqualify me from many private plans. Additionally my company doesn’t have their own health plan but instead purchases a plan through a business association and the plan is in the name of the business trade association. If they do go out of business (which looks like will happen) – will I be able to purchase a family policy through the business association? Or will I be able to find a new plan due to the HIPAA act which makes it illegal to exclude people with preexisting conditions as long as too much time doesn’t pass. Should I apply for COBRA instead? It just seems expensive…

Thanks!

– Confused in Minnesota

Dear Confused in Minnesota –

First of all – you are definitely one step ahead of the game since you are already thinking about this. Many people don’t give a second thought to health insurance until it is too late and then scramble to find a solution. Being proactive before your company goes under is a smart move and will likely save you money and help you find the best coverage for you. This is even more important since you have a preexisting condition that could exclude you from certain policies and plans.

Let’s start with the good news. Under the HIPAA – Health Insurance Accountability and Portability Act – you are guaranteed to have access to continued health insurance that includes coverage of your preexisting condition as long as you sign up quickly for a new policy. In most cases you have 63 days to sign up for a new plan before companies can exclude your preexisting condition. Additionally some states mandate that you use COBRA as an option first if it is available. It is best to check with your state health care office for exact regulations in your state.

Now let’s talk about COBRA. In order to be able to use COBRA the company has to remain in business – without a business and a health plan, there is no COBRA insurance. So is the company does go out of business as you expect, COBRA is off the table and you will need to look for a new policy.

In terms of buying an individual health plan from the business association, that will be up to them. They may allow you to purchase a plan since you will remain in that industry, but they also may not. Health insurance is expensive and they may not be willing to take on an additional expense.

Likely your best option will be to find a new plan as soon as you learn the company is indeed closing. Make the start date of that plan the same day as your last day of coverage. Make sure to find a plan that allows you to continue to use the same doctors and networks you prefer for your condition and when you shop around for policies, ask specific questions about your health condition and coverage. The more you ask the better the policy will be that you find.

Thanks –

COBRA Insurance Direct

COBRA and Bankruptcy

Posted on: September 30th, 2012 by Kristen Marie

medical files

It’s an all too common situation, a company or business files for bankruptcy or closes it doors and suddenly employees are scrambling to figure out what to do about health insurance. Naturally COBRA insurance surfaces as a possible insurance option, but unfortunately COBRA isn’t an option when a company goes bankrupt. Since COBRA is a continuation insurance, there must be a policy to continue. When a company goes bankrupt, their insurance policy is cancelled as well which eliminates COBRA as a potential insurer. So what can you do?

First things first, you need to find another health insurance plan and quickly. Not going without health insurance is dangerous, not only because you may need medical care and it will be extremely expensive but also because going without health insurance makes it harder to get health insurance in the future, especially if you have a preexisting condition. Under the HIPAA law insurance companies can not deny you for a preexisting condition as long as you have continuously held insurance and not experienced a lapse in coverage of over 60 days. This is extremely important to pay attention to because you never can predict medical needs or a condition arising and not having continuous coverage can make this more difficult for ever.

So what options do you have? Well luckily there are lots of alternatives to COBRA and many are actually much less expensive. The option that is best for you will depend on your current health status, age, income, and how you like to use your health insurance.

For people who have preexisting conditions and major medical needs there are likely two insurance options you should consider. The first is a private individual or family plan that will offer similar coverage to what you had before the company went bankrupt. Additionally you should look into preexisting condition insurance (PCIP plans) which offer insurance to people with preexisting conditions. You could also look at state high risk pools.

For people who are generally healthy, there are lots of options for insurance and it depends on your needs. For a full service plan you will want to look at an individual or family plan that mirrors a typical employer plan. However if you do not use your insurance as much and want a cheaper option, then you can look into high deductible and short term plans.

COBRA Insurance Between Jobs

Posted on: September 29th, 2012 by Kristen Marie

A common question we hear from folks considering COBRA is whether or not it is a good idea to use COBRA insurance between jobs. Unfortunately the answer isn’t straight forward and depends on your current health status, age, and how long you think you will be between jobs. For some COBRA will be the best option between jobs and for others they may be able to find a much less expensive alternative. However here is some general advice about insurance options between jobs.

Length of Time Between Jobs

The length of time between jobs is going to be a major factor in determining whether or not you should use COBRA. But first let’s define the length of time as not just when you start the new job, but when your health insurance would start with the new job. Many times you have to be on staff for thirty days before the new insurance will kick in.

For people who will be without insurance for less than 2 months, they likely shouldn’t do anything. Here’s why. COBRA is retroactive back to the day you lost coverage and you have 60 days, or two months to sign up. That means that should you end up needing any type of health care during the 60 days you can sign up before the window is over and get reimbursed for your expenses once you enroll in COBRA. However if you don’t have any medical care needs, which is likely, then you have saved the two months of premiums for COBRA, which could be over $2000 for a family.

For people who will likely be without insurance anywhere between 3 months and 18 months (the length of COBRA coverage), whether or not COBRA is right for you will really depend on your health care needs. For people with preexisting conditions or consistent medical care COBRA may be the best option especially if you can afford it and only will need it for a short time. However if you do not have constant health care needs and don’t use your insurance often then a COBRA insurance alternative may be a better option, especially if there is a long period between jobs. Short term insurance could be a good alternative for a time period of 1 year or less and a private plan could also help save you money if you want more comprehensive care.

Your Health Status

Generally it is recommended that anyone with serious health care needs or preexisting conditions use COBRA to continue their care since they are likely to either be denied from an interim plan and/or be charged outrageous premiums. Additionally not having to change a treatment plan or doctors is very beneficial for someone who uses their health insurance frequently. Alternatively for someone who is generally healthy, young, and doesn’t use their health insurance often, a private plan will likely help them to save a significant amount of money. These plans are similar to COBRA coverage but will charge lower premiums for people who are healthy. Additionally you can consider high deductible plans and short term plans if you do not often use your insurance.

Applying for Benefits – The COBRA Insurance Application

Posted on: September 28th, 2012 by Kristen Marie

In a difficult economy many people are facing difficult decisions about COBRA and other health insurance options and want to fully understand the process of enrolling in COBRA before making their final decision. Luckily the COBRA application process is not overly complicated and you can easily complete the form in a short time. Here’s how to complete the application for COBRA.

  1. Decide Who Is Using COBRA: Before you start filling out the application it is important to determine what family members are going to sign up for COBRA and what family members can use a cheaper alternative. Generally people who are healthy can find something less expensive than COBRA. Additionally children many times can qualify for state sponsored programs that are at a lower cost. In the COBRA application you will indicate each person signing up for COBRA so make sure to fully investigate your options before completing this step.
  2. Take Note of the Due Date:The date on the application is very important and missing the deadline can mean you are not eligible for benefits from COBRA. Make sure you know the due date and are prepared to complete the application at least one week before the deadline. If it is not turned in within 60 days of the notification date, you lose your option for COBRA.
  3. Know the Cost: The next thing to plan for is the cost of COBRA. Since COBRA is retroactive back to the date that you lost coverage, you are responsible for paying the full premiums for that time period when you sign up. If you sign up right away this will likely only be one month of premiums. However if you wait to sign up until the end of the 60 day you will have to pay for two months. Failure to pay the full premium can result in loss of benefits.
  4. Mail In the COBRA Application: Lastly you need to mail in the application to the address listed on the application form. Make sure to send this in at least one week before the 60 day window to make sure you do not miss the deadline due to the time it take for the application to arrive.

How Do I Apply For the COBRA Subsidy?

Unfortunately the COBRA subsidy from 2010 no longer is available and you therefore can not apply for it. However there are still ways to save money on COBRA that can help you find ways to cut down the costs. Learn more about reducing COBRA costs.

What is the COBRA Insurance phone number?

Posted on: September 27th, 2012 by Kristen Marie

medical equipment

You have questions about COBRA and want to talk to someone about them. It’s a pretty common situation for people looking at COBRA coverage but it can be surprisingly difficult to know where to call and who to contact for COBRA. Here is a quick guide about who to contact and how to contact them when you have questions about COBRA that you need to get answered. Additionally you can take a look at our frequently asked COBRA questions.

Questions About Eligibility

When you have questions about whether or not you are eligible for COBRA the first place should you call is your former employer They have an obligation under the law to inform you of your COBRA rights both when you start working and after you have lost your job. If you are not able to find the answers you want after speaking to your former employer, the next place to call is the health insurance plan provider. They should also be able to inform you if you are eligible. Finally if all else fails you can contact the Department of Labor at 1-866-487-2365.

Questions About Coverage

When you have questions about your coverage including what services you can use and what different services of health care visits will cost you should contact your health insurance company. They will be able to tell you exactly what is included and how much it costs. They can also help you determine which doctors and hospitals you can visit with COBRA. Remember COBRA is just an extension of your old plan so everything will stay the same.

Questions About COBRA Laws

If you have questions about the actual law for COBRA the best place to look is either at our COBRA law page or to contact the Department of Labor, who oversees the law in the federal government. In many cases you can find all the information you need about the law online, but if not try calling the Department of Labor hotline at 1-866-487-2365.

Employer Failed to Fulfill Their Responsibility

If you believe that your employer has not fulfilled their legal obligations under the law, this is a very serious issue that carries very serious fines. In fact employers can be fined up to $110 per employee daily from the IRS and also incur hefty fines from other agencies. You should immediately contact the Department of Labor in this situation so that they can assist you right away.

COBRA Insurance Rules

Posted on: September 26th, 2012 by Kristen Marie

doctor writing prescription

Like any other federal law, there are lot of COBRA rules that are important to understand and follow to ensure that you get the coverage you want and are able to keep it. Failure to follow the rules for COBRA can result in you losing your coverage or not being able to sign up at all. Additionally family members and other beneficiaries may miss out if they are unaware of when they need to notify insurance companies and workplaces of their wishes. Make sure to follow these rules when even considering COBRA health insurance.

Rules for Signing Up

There are certain rules that both the employer and employee must follow in order to sign up for COBRA health and make sure they get the coverage they want.

  • The employer must notify the employee of their COBRA rights when they first become employed
  • The employer has 14 days to notify the employee and their beneficiaries of their eligibility
  • The employee and beneficiaries have 60 days from the date on the notice to sign up for COBRA
  • COBRA is retroactive back to the day coverage was lost if someone signs up
  • In the event of divorce, death, Medicaid qualification, or loss of dependent status it is the responsibility of the beneficiary to inform the workplace and insurance company of their intention to sign up for COBRA

Rules About Cost

The federal government also set very specific rules about the cost of COBRA that anyone on the federal plan must follow in order to be in compliance.

  • COBRA will cost 102% of the full premium
  • Employers are not required by law to subsidize any part of the COBRA expense
  • Insurance companies may cancel your COBRA coverage if you fail to pay your premium on time

Rules About Changes to Plans

Many people want to know what happens to their plan when the company changes the plan or even goes out of business. Here are the most common COBRA rules regarding changes to health plans.

  • If the company goes out of business or stops offering health insurance plan, your COBRA coverage will end
  • If the company changes insurance providers, you will have the same option to switch to the new provider as you would if you were still employed. Make sure to closely look at any changes in coverage and cost before just enrolling in the new plan
  • Open enrollment works the same with COBRA as it did while you were employed. Always plan carefully around open enrollment since COBRA only lasts for 18 months.
  • If the employer decides to increase the cost of the health plan, the same price increases will be passed onto your COBRA coverage.
  • Any changes to the cost of co-payments, deductibles, hospital charges, co-insurance, etc. will also affect your plan

Anytime you are unsure of the COBRA rules the best thing to always do is to call your health insurance provider or the Human Assets department at your former company. Additionally our questions and answers about COBRA can help you find information you are looking for about COBRA coverage, eligibility, and more.

COBRA Insurance Wiki

Posted on: September 25th, 2012 by Kristen Marie

happy doctors

A wiki is a website or article that is compiled and updated by users to share information about a certain topic and this is our own version of a cobra insurance wiki – compiled of common user questions and responses to help you find the information you want and need about COBRA. Who better to hear from then people who have been in the same situation as you have and know just what you should consider and think about.

Can you explain COBRA insurance to me?

COBRA is a way to continue to use the the insurance you had while you were employed (or through an employee) after job loss. Job loss can be either voluntary job loss like quitting or retiring and can be involuntary like being laid off or fired. With COBRA you and your family are able to keep using the exact same plan for up to 1.5 years, however you are responsible for paying the entire cost. The employer no longer helps with costs.

What insurance company is in charge of COBRA? Can I choose?

COBRA insurance is a law not an insurance company of plan. Under this law employees and their family members have the option to continue to use the exact same insurance plan after job loss for up to 18 months. Therefore the insurance company in charge of COBRA is the exact same company that you had before. Everything stays the same.

I heard COBRA is expensive, is that true?

Unfortunately for most people COBRA is very expensive since you must pay the full cost on your own without any employer help. For most the cost of insurance will double or even triple compared to what they are used to paying. The average cost for a family is over $1000 and the average cost for one person is around $450 monthly.

I only need COBRA for about 6 months, is that possible?

Yes. COBRA insurance can be used for as long or as short of a period as you wish up to the 18 months. You can cancel COBRA at anytime as long as you reach out to the insurance company and let them know you no longer need the coverage. Additionally if you think that you will only need coverage for six months, you may also consider a short term insurance plan which will cost significantly less than COBRA.

How will I fill my prescriptions with COBRA? How much will they cost?

The cost of prescriptions will be the same as they were when you were covered through an employer since it is the exact same plan. For example if you paid $10 for regular prescriptions and $5 for generic prescriptions while you were employed, the cost will be the exact same with COBRA. Additionally doctors, hospitals, and other health services will also be treated the same under COBRA insurance. Remember the plan is the exact same with COBRA. COBRA is just the law that allows you to continue to use it and makes sure that you do not experience any lapses or breaks in coverage.

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