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Archive for August, 2012

Will COBRA Insurance Work If I Move?

Posted on: August 21st, 2012 by Kristen Marie

stethoscopeLosing a job normally brings about lots of changes to someone’s lifestyle, and more often than not this may involve moving. Sometimes it is a local move, but many times people end up moving long distances to save money, find work, or be closer to family during a hard time. However for people using COBRA insurance, or considering COBRA, relocation may affect your benefits. Therefore it is important to find out what consequences relocation will have on your COBRA coverage before packing up.

The main factor that will determine whether or not you can use COBRA if you move is your health insurance provider and policy. Some insurance plans only cover people living in a certain region or state, while others offer national coverage. Normally if your plan is a regional or state plan, your insurance will be cancelled if you move out of that coverage area. For national plans, COBRA usually extends to any state you move to. Normally international moves are never covered though COBRA insurance.

Additionally, make sure not to make any assumptions about your plan without consulting your health insurance provider and asking them specifically about your relocation plans and COBRA coverage. Many people make assumption that because their plan is provided by a national company, like Blue Cross, that automatically means that their coverage will work nationally. However most plans sponsored by national companies are regional or state based and in fact will not work if you move.

Medical Insurance for Pre Medicare Spouses and Dependents

Posted on: August 20th, 2012 by Kristen Marie

nurse with clipboardRonald has just turned 65 and is planning to retire in the next month.  He will qualify for Medicare and is planning on enrolling.  However, Ronald’s wife is only 60 and has been using Ronald’s employer sponsored health insurance plan.  Additionally, Ronald’s 24 year old daughter, who is in graduate school, is also using the employer plan from Ronald’s work. What options does Ronald’s wife and daughter have to stay insured?

Unfortunately this situation is all too common since Medicare is only available to people over 65 unless there is a disability.  So what options do you have for health insurance? 

1.  COBRA Insurance:  The most common option that people in this situation will use is COBRA health insurance.  COBRA will allow both Ronald’s wife and daughter to stay on his former employer sponsored health insurance plan for up to 36 months since Medicare qualification is a qualifying event.  Additionally to qualify for COBRA the plan must cover at least twenty full time employees and still be active.  Under COBRA coverage the health insurance plan will remain exactly the same – same doctors, deductibles, co-payments, etc. which is a huge benefit for many.  However the main drawback is that COBRA can be very expensive since they will be responsible for paying the entire premium.

2.  Employer Retiree Benefits:  Some companies offer retiree benefits to their employees after retirement.  Many times one of these benefits is that spouses and children can extend their coverage for a predetermined length of time.  The cost and term length vary by employer so to find out if this is an option for you, you will have to inquire with your workplace.

3.  Keep Working:  Although not the favorite option, sometimes if possible it actually may be beneficial for Ronald to keep working to maintain health insurance.  This is usually only in cases where there are serious health conditions and finding insurance through another provider or COBRA isn’t going to work out.  In some cases where keeping insurance is absolutely necessary, continuing to work may be the best option.  For people in this situation, you may be able to cut back your hours and still qualify depending on your workplace.

4.  Buy a Private Policy:  The last option, and one of the most common, is to buy a private policy.  Private policies can offer all levels of coverage from comprehensive and minimal and usually are much more affordable than COBRA for people who are relatively healthy.  For people with preexisting conditions or major medical needs, they can consider PCIP plans and state high risk pools.

In any case, it is extremely important that Ronald and his family find some way to keep health insurance coverage.  Having any lapse in coverage can make it more difficult to qualify for new plans in the future and also can have dire consequences should a medical need arise.  Carefully weigh your options if you find yourself in this situation to make sure that you choose an option that works in both the short term and long term for your financial situation and health situation.

Things to Ask When Shopping For Insurance

Posted on: August 13th, 2012 by Kristen Marie

looking at an insurance policyShopping for an insurance policy can be intimidating and it can be hard to understand the difference between plans as well as what would be best for you and/or your family.  Whenever you are shopping for a plan, make sure to always consider multiple plans and also to ask the important questions up front so you fully understand the plan.  Here are some questions you should always ask when you are considering a health insurance plan and/or comparing a health plan to COBRA insurance.

1.  How much is the monthly premium for the plan?  Can it change?  How much?  Asking this question up front is a good idea because cost is normally something everyone is thinking about.  However it is important not only to ask about the premium cost, but also to ask about if the premium amount can change and if there is a limit on how much it can increase.  Some health insurance companies are known to hook people with low premiums and then significantly up the costs after 3 or 6 months.

2.  Are you a state approved health insurance provider?  In order to provide insurance to you, the company must be authorized in your state to sell and provide insurance.  Always ask what states the insurance company is authorized in.  Also if you move or travel frequently, make sure to ask if the plan works when traveling or if you move to another state.

3.  How long is the policy length? What costs are there to cancel early? It is very important to know how long the policy you are purchasing lasts.  Some policies are very short term while others lock you in for a much longer period.  Since it is difficult to predict when you will get a job with health insurance again, it is a good idea to choose a plan that is flexible.

4.  How much are the co-payments and deductibles?  Co-payments and deductibles can end up adding large expenses to your health insurance plan.  A deductible is the amount you have to spend before the insurance will start to pay.  A co-payment is how much you have to pay whenever you go to the doctor, fill a prescription, or visit the emergency room for example.  Find out the the costs of these are and then estimate how often you go to the doctor to get a rough idea of how much you may spend annually on these things.

5.  How much does it cost for out of network care?  In the event you ever need care outside of your network, it is important to know those costs ahead of time.  Visiting a specialist many times may fall out of the network and you need to know what the cost will be if this occurs.

6.  Is there a coinsurance plan?  What is the maximum amount?  Coinsurance plans are very common but can also be very expensive if you have major medical expenses.  With coinsurance you are responsible for paying a percentage of the insurance costs, up to a maximum amount in most cases.

7.  Is there an annual limit?  Ideally you want a health insurance plan without an annual limit.  Although no one thinks they will ever reach their annual limit, of say $1 million, you can quickly reach that if you have a serious illness or major medical need.

Health Insurance After COBRA Ends

Posted on: August 8th, 2012 by Kristen Marie

doctor treating patient

While COBRA medical insurance can be a great option for keeping health insurance, at some point or another it is going to end. Usually after just 18 months. And although this may seem like a long time when you sign up, many people find that the coverage ends very quickly and find that they still are unemployed or without alternate health insurance. So then what? Luckily there are many options out there for health insurance. But first let’s talk about why it is extremely important that you maintain health insurance.

The Importance of Maintaining Health Insurance

Clearly it is important to maintain health insurance in case of some kind of medical emergency or need, but there is another equally important reason that you should also ensure that you do not have a lapse in coverage – HIPAA.

HIPAA is a piece of legislation that was passed by Congress that is meant to ensure that people with preexisting conditions do not lose access to health insurance. Under this law, as long as you do not experience a lapse in health insurance coverage, you can not be denied from a new plan based on a preexisting condition. Thus maintaining health insurance is extremely important. Don’t have a preexisting condition? You still need to maintain coverage with no lapse because you can never predict when something will happen. If you develop a preexisting condition while having no health insurance, not only will the costs be sky high, you will also be denied from most private plans in the future.

What Health Insurance Plans Are There After COBRA?

Depending on your budget and health care needs, there are many different options for health insurance after COBRA ends. The most common plans that people use who are looking for plans that provide similar coverage to what they had on COBRA are private individual and family plans. These plans provide comprehensive coverage and actually can be much more affordable than COBRA. You can get a free quote below to explore these plans and find the right option for you.

Additionally people who live at or near the federal poverty line can also look into state Medicaid programs that may provide free or reduced cost insurance to them and their families. Normally these programs extend only to those families most in need.

COBRA Coverage and Gross Misconduct

Posted on: August 8th, 2012 by Kristen Marie

doctor filling out formA question that we hear often from visitors to the site is about exactly what qualifies as gross misconduct and would therefore disqualify them from being able to enroll in COBRA insurance. Employers in some cases will try to deny COBRA coverage to employees due to misconduct, but the law is very strict in terms of what actually qualifies as gross misconduct as opposed to simple misconduct.

Let’s start with the legal definition of gross misconduct: Acts of gross misconduct are intentional, wanton, willful, deliberate, reckless, or in deliberate indifference to an employer’s interest. Unfortunately this is still pretty broad. So let’s look a little but deeper. In most court cases, gross misconduct must also be objectionable and intentional. It can not be a mistake or negligence. This means that simple mistakes can not be categorized as gross misconduct.

Additionally, based on past cases we can also include the following items as gross misconduct that would make someone ineligible for COBRA insurance:

  • Disregard for the overall safety and security of others
  • Purposeful acts of hostility and violence
  • Any attempt to financially defraud a company
  • Serious insubordination
  • Dishonesty and misrepresentation

In addition, criminal acts are almost always considered gross misconduct under the law.  This would include violence, sexual misconduct or harassment, theft, embezzlement, and any other criminal charge that the company files against an employee.  Moreover, behavioral gross misconduct can qualify which may include sexual harassment and discrimination of any kind.

Finally to help solidify your understanding of gross misconduct, let’s look at some examples of things that wouldn’t be considered gross misconduct.

  • Poor performance
  • Minor errors in judgment or negligence
  • Being frequently late
  • Miscommunication
  • Frequent absences
  • Frequent mistakes

Free Health Insurance Options When COBRA Costs Too Much

Posted on: August 8th, 2012 by Kristen Marie

doctor writing prescriptionsWhen you lose your job, you normally find yourself in a tricky and difficult financial situation. And for many this makes COBRA health insurance just too expensive to keep up with. Luckily, if you find you can not afford COBRA, there are some free and reduced health insurance options out there for people living at or below the federal poverty line.

  • Option 1: Medicaid – Medicaid insurance is offered through state governments to lower-income people, children and children, people living with disabilities, and the elderly.   The specific requirements for signing up and eligibility are designated by each state but almost always include people over 65, people with disabilities living under a certain income limit, and families with children living under the poverty line.  The cost of Medicaid depends on your income and will be determined individually by the Medicaid department in your state.  Medicaid normally covers everything that a typically employer sponsored program would cover.
  • Option 2:  CHIPs for Kids – CHIPs, which stands for Children’s Health Insurance Program, is a program designed specifically for families who earn too much money to qualify for Medicaid, but can’t afford to buy their own insurance plan.  In most cases, children are eligible if the family earns less than $45,000 (in 2012) a year and can use the coverage until they are 19 years old.  Pregnant women can also use CHIPs in most states.  CHIPs has a different cost in every state but normally does not exceed 5% of income monthly.  Coverage is similar to a group insurance plan.
  • Option 3:  Community Health Care Centers – Many communities have opened up their own health centers that provide free and very reduced cost care to residents.  Many people without health insurance find that these centers can be good places to go for care.  Normally you can learn about community health centers by contacting your local Health Department.

What If I Don’t Qualify For These Programs?

Some people will find that their income is too high to qualify for any of these programs, but COBRA is still too expensive. In that case, private insurance is probably the best option to lower your costs and find something that works for your budget. Individual and family plans will be the most expensive private plans, running about $400 monthly for a family. Catastrophic and high deductible plans can be as little as $100 monthly for a family but will only provide very basic coverage. To find out what private plans you may qualify for, you can use the health insurance quote box to learn about your options.

Can I Use COBRA Insurance if I Quit?

Posted on: August 6th, 2012 by Kristen Marie

Dear COBRA Insurance Direct,

I am considering quitting my job but I have a health condition and want to make sure I keep health insurance.  I have heard from folks that you can use COBRA insurance if you quit, but some people say that isn’t true.  Which is it?  Can I use COBRA health insurance if I quit my job?  Thanks –

 - Want to quit

Dear Want to Quit,

Assuming you meet the other conditions for qualifying plan and qualifying beneficiary, then you can qualify for COBRA health insurance if you have quit your job as long as their is no presence of gross misconduct.  COBRA is meant for both voluntarily and involuntary job loss, meaning that quitting will indeed make you eligible.

With that said, the one thing to keep in mind if you are signing up for COBRA insurance and quitting is that COBRA is only a temporary solution and will end after 18 months.  Given you have a health condition, it is important to make sure you are sure you can qualify for a new health insurance plan before COBRA insurance runs out.

COBRA Termination

Posted on: August 6th, 2012 by Kristen Marie

Many people want to know what events can trigger COBRA insurance termination, or in other words, can end your coverage with coverage.  There are many events that can trigger COBRA coming to an end, but these are the most common.

  • Failure to Pay Premiums:  Unfortunately the most common reason that COBRA is terminated is when someone fails to pay their premiums.  Under the law, your coverage can be terminated if a premium payment isn’t received on time.  If you find yourself in a situation where you can not pay, it is extremely important to reach out to the company beforehand and try to work something out.  Otherwise you may find yourself without COBRA coverage.
  • Group Health Insurance Plan Ends:  If for any reason the group health insurance plan ends at your former place of business, then COBRA also ends.  The group plan must be active for you to use it with COBRA.  That means that if your previous company stops offering a health plan, you also lose coverage.
  • Company Goes Out of Business:  When a company goes out of business, the health insurance plan is no longer active and that means it can not be continued with COBRA.  The coverage will be terminated and you will need to seek out alternate insurance.
  • COBRA Period Ends:  At the end of the COBRA term, normally 18 months, the coverage will be terminated.  In most circumstances unless there is another triggering event, you can not extend coverage beyond the time period.
  • Qualification for Medicare: When you qualify for Medicare you are no longer eligible for COBRA in most circumstances.  You will need to change coverage to Medicare instead of COBRA.  However family members can stay on COBRA and in fact may even be able to extend coverage due to the second qualifying event.
  • Qualification for New Insurance Plan:  If you get a new job and become eligible for a new plan, you can no longer use your COBRA coverage.  However you can continue to use COBRA if there is a waiting period to sign up for the new plan.

What Are My Options if COBRA Insurance is Terminated?

The main option you will have if COBRA is terminated and you are not employed is to seek out a private health insurance plan or a government health insurance plan.  Private plans are the most common.  You can learn more about other options here or by getting a free health insurance quote.

COBRA Insurance and Unemployment

Posted on: August 6th, 2012 by Kristen Marie

Dear COBRA Insurance Direct,

I recently lost my job and am facing unemployment for the first time in my life.  At the beginning I was excited about the option for COBRA coverage, until I looked at the notice and found out it would cost $1400 monthly to keep my plan for my family.  Given I have just lost all of my income and am unemployed, I am not sure how I am supposed to pay this amount.  I have some savings that will work for a couple of months, but then what? 


Unemployed and Worried

Dear Unemployed and Worried,

Unfortunately the situation you are explaining is not uncommon for those who are unemployed.  Although COBRA, short for the Consolidated Omnibus Budget Reconciliation Act, is a great program that provides an important interim plan for many, it comes at an extremely difficult financial time for most given their unemployment.

The reason that COBRA is so expensive is that your employer no longer subsidizes the cost of the health insurance plan and you are responsible for paying the full premium.  Most employers subsidize up to 90% of the cost, so when you have to pay the whole cost yourself it can be quite a shock and quite expensive.  Additionally group health insurance plans are expensive in general because they provide coverage to people with any conditions and with a variety of risk levels.

So what can you do?  Well it depends on your situation.  If you have a preexisting condition or serious health needs, COBRA insurance or a PCIP plan, may be your best bet.  The reason is that many people do not qualify for private plans in this situation. However if you are relatively healthy, you should definitely consider a private health insurance plan, which normally can severely reduce the cost of insurance.  The cost can be reduced even more if you consider high deductibles and HSA savings accounts.

Another option is to sign up for a spouse’s health insurance plan or a government plan if you qualify.

Good Luck!

COBRA Non Compliance – Employers

Posted on: August 6th, 2012 by Kristen Marie

The IRS just came out with a report siting that over 90% of companies are non-compliant in terms of their COBRA insurance administration, and therefore are opening themselves up to the danger of serious fines, auditing, court cases, and penalties.  The main reason that so many companies are believed to be non-compliant is that companies believe their health insurance provider is handling their COBRA administration and they believe the health insurance company is the liable party.  However, even if the health insurance company handles COBRA, at the end of the day the employer is 100% liable for COBRA and it being administered according to the law.

In addition, COBRA non compliance can have serious consequences for employers.  These include

  • Losing expensive court cases:  Over 75% of companies lose COBRA court cases and end up liable, responsible, and in most cases owing major damages.
  • Expensive Fines:  $100 IRS penalty per beneficiary per day (up to $200) plus a $110 ERISA penalty per beneficiary per day fine for non compliance.  That means the company will be fined over $100,000 for just six months of non compliance for 1 family of four.  Imagine if there were more than one and how quickly these fines can add up.  They are enough to bankrupt companies in times of major layoffs.

So what do you need to be in compliance for COBRA insurance?  Here are some of the most important documents and evidence you need, but the list is not exhaustive.

  •  Evidence that every person on the group health insurance plan received an initial notice about COBRA when they enrolled
  • COBRA insurance handbook
  • Standard COBRA form letters for employers and family members
  • Copies and records of COBRA notices
  • Copies and records of any COBRA events

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