Frequently Asked Vermont Health Insurance Questions

Frequently-Asked Questions

When is my insurance company allowed to stop coverage?

An insurance company can cancel your coverage under certain limited circumstances. These include:

• Failure by you (or your employer, if you get coverage through your job) to pay for the policy. For policies paid on a monthly basis, Vermont law requires insurance companies to give you at least 10 days notice after the payment becomes due before they cancel a policy for non-payment.
• If you intentionally include wrong information on your application for insurance.
• If your employer chooses to cancel the group policy it offers, the employer must notify you of the cancellation (usually 30 days in advance).
• If your employer has been paying for your insurance, but goes bankrupt and fails to pay premiums.
• If the insurance company no longer offers that particular type of coverage.
• If your employer is no longer a member of an association through which it used to buy your insurance.
• If your employer fails to meet any participation or contribution requirements for group insurance.

If you newly applied for coverage and want to cancel your policy, you must return your policy within 10 days (30 days for those eligible for Medicare) of receiving it from the insurer to receive a full refund.

Can I change my individual or small group policy?

Yes. Vermont is a "guaranteed issue" state. This means that you can change health plans without being denied coverage. However, your new insurer might limit the coverage you get for any "pre-existing conditions" you have. Before canceling any existing health insurance coverage, be sure to check with your current insurer and certificate to find out if you are required to maintain coverage for a specified length of time before you may cancel it.

What are pre-existing condition clauses?

Under certain circumstances, an insurance company may refuse to cover illnesses or health problems discovered or treated in the six months before you bought coverage. Vermont law limits pre-existing condition exclusions to the first 12 months of your policy. After that time, it must start covering you for treatments related to that illness or health problem, subject to the terms and conditions of your policy.

In addition, under Vermont law, insurers are limited in refusing to provide coverage for pre-existing conditions as listed below:

• If you are buying individual insurance directly from the company, the new insurer must cover you for pre-existing conditions if you had at least nine months of continuous health coverage from another company, and it has not been more than 63 days since that coverage ended.
• If you are covered through a new small group plan paid through your employer, the new insurance company must cover you for your pre-existing conditions if you have had at least 9 months of continuous health insurance coverage, and it has been no more than 90 days since you had that insurance.
• If you had some prior health insurance coverage, but not the full 9 months required for the type of policy you are buying, you will get some "credit" for that coverage, although the insurer can still prohibit coverage for a pre-existing condition for some amount of time.

If you have never had insurance before buying a policy (whether directly or through your employer), you will probably have to wait between 6 and 12 months before the insurance company will cover any pre-existing health condition. If you have been covered by other insurance prior to your new coverage, your insurer may cover all your health problems as soon as you get your new policy, or at least within a shorter period than the usual 12-month exclusion period.

You should also know that under federal law, if you are covered by a group-sponsored health plan (both large and small group), pregnancy is never considered to be a pre-existing condition. That means if you are covered by a group policy, you should never be denied coverage for pregnancy-related services just because your employer or your spouse's employer bought a new insurance policy after you became pregnant.

Can my insurer raise my rates?

Yes, but not simply because you use services or your health status changes. Insurers are permitted to raise premiums when overall costs increase. Insurance companies must get the Department's approval before raising their rates, and must notify you before the increases take effect.

I get my insurance through my employer. What happens if I lose my job or if I die? Can I or my family continue my health coverage?

If you lose your job voluntarily or involuntarily (unless the job ended as a result of misconduct), Vermonters have the right to continue group health insurance coverage for themselves and their dependents for up to six months under the Vermont Continuation of Coverage Program.

The Vermont Continuation of Coverage Program is also available in the following circumstances:

• When job loss is the result of the death of an employee, or
• When a spouse or dependent child loses coverage as the result of a divorce or legal separation from the employee, or
• When a dependent child has reached the maximum dependent age (e.g. up to either their eighteenth or nineteenth birthday or, depending upon the policy, up to twenty-five years old in the case of a full time student).

To continue group benefits under the Vermont Continuation of Coverage Program, the employee must have been covered for the three months preceding termination under the company's health insurance plan. You will now have to pay the entire premium yourself.

Under federal law, the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows continuation of group health coverage for employees or their families who lose coverage as a result of either a voluntary or involuntary termination of employment, reduced hours, death or divorce. It applies to companies that provide health plans for twenty or more people. The period of continuation of coverage may vary between eighteen and thirty-six months depending on your situation. If you choose to continue your coverage under COBRA, your employer can charge a processing fee of up to 2% of your premium.

At the end of the continuation of coverage period, you or your family may be offered a "conversion" plan by the insurance company. The new policy will be an individual (non-group) policy and it may be different coverage or cost than your previous employer plan.

What happens if I am covered by another plan, or my spouse's plan, in addition to my own group policy?

Insurers coordinate benefits to make sure that only one insurer is responsible to pay first, or "primary", benefits. The secondary carrier is then responsible to pay deductibles or any remaining covered balances, subject to the terms and conditions of your health insurance policy. (The process should be described in the policy.)

How long are my children covered under my policy?

Dependent children are generally eligible for coverage until their eighteenth or nineteenth birthdays if they are not married. Employer health plans may also offer a student rider that generally extends coverage up to age 25 for full-time college students (taking at least 12 credits per semester). However, each policy or rider is different, so it is important to check with your employer or insurer.

What happens after my child turns 18 or 19, or stops going to college full-time?

When your child is no longer covered as a dependent on your employer-sponsored health policy, and your employer has more than 20 employees, generally he or she would have the right to continue that coverage for up to 36 months under COBRA.

If your child has been covered as a dependent on a health policy sponsored by an employer with fewer than 20 employees, he or she has the right to continue that coverage for up to 6 months under the Vermont Continuation of Coverage Program.

In both situations, the premiums will be the responsibility of the child. At the end of the continuation period, the insurer may offer a conversion plan, which may provide different coverage than the policy provided through the employer plan.

What happens if my child has a disability? Will he lose his coverage when he turns 18 or 19?

Not necessarily. If a child was covered under the parent's insurance prior to turning 18 or 19 years of age, and due to a disability is unable to support him or herself, the insurance company must continue covering the over-age child, as long as the child remains chiefly dependent on his parent(s) support because of the disability. The company can periodically ask you for proof that your child's condition is ongoing, but no more than once a year. Information from a physician may be required.

I'm getting a divorce. What happens to my insurance? Can my children still be covered under my ex-spouse's policy?

Divorce is considered a 'qualifying event' in terms of eligibility for continuation of group coverage if your ex-spouse's employer has more than 20 employees and you have been covered through an employer-sponsored plan. In this case, you and your children can continue coverage through COBRA in the employer-sponsored plan for up to 18 or 36 months, depending on your situation. You will have to pay the premium yourself. After your group coverage ends, you then have the right to buy a policy directly from the insurance company, although the coverage may be different than the group's plan. If you have group coverage through an employer with fewer than 20 employees in the health plan, you may extend your coverage for up to six months under the Vermont Continuation of Coverage Program. You will have to pay the premium yourself.

If your spouse bought a policy directly from the insurance company, rather than getting coverage through an employer, you will now have to buy insurance for yourself and your children in the same way. Under Vermont law, insurance companies that sell individual policies must accept anyone who wants to buy this insurance.

When you go to court, you should make sure that a section of your separation agreement or divorce order clearly states which spouse is responsible for carrying insurance for the divorced spouse and any dependents, and who is responsible to pay for it. The agreement or order should also clearly state who is responsible to pay for your out-of-pocket health insurance costs (deductibles, coinsurance or co-payments).

I have a new job with an employer who provides health insurance. But, I have been told that I will have to wait three months before I will be covered by the plan. Is this legal?

Yes. Some employers impose a "waiting period" before new employees are covered by their health insurance plans. The waiting period is usually one to three months, although it can be longer.

I only work part-time. Can I still get insurance through an employer-sponsored plan?

Yes. Employers have the option of including part-time employees (those who work 17 hours per week or more) in any health plans they provide their full-time employees. You should check with your employer directly to find out whether they will cover you.

My employer offers something called a "flexible spending account." What is it, and how can it help me with my medical expenses?

A flexible spending account allows you to pay for certain medical services with pre-tax dollars. Those dollars can be used to pay for medical expenses not otherwise covered by your health insurance such as co-payments, prescription eyeglasses or dental work. Your employer, as part of a benefits package, may offer a flexible spending account. If you choose to set up such an account, you can ask your employer to withhold a specific amount of money each week from your paycheck and put it into the account. At the end of each year, your employer keeps any money from the account that you did not spend ñ so calculate carefully!

Please note that a flexible spending account is different than a Health Savings Account (HSA) and is subject to different IRS regulations. Ask your employer or insurer for details.

Is my civil union partner entitled to health insurance coverage under my policy?

The insurance provisions of Vermont's civil union law took effect on January 1, 2001. The civil union law applies only to Vermont-regulated health insurance plans, the State employees health plan and Medicaid. It does not govern other employers who self-insure and do not buy insurance policies.

In the individual market, insurers subject to Vermont law are required to offer civil union couples and their families' coverage equal to the coverage that they offer to married couples and their families. If you purchase family or two-person coverage in the individual market, you are entitled to family or two-person rates.

Insurers in the small and large group markets are required to offer employers policies that include civil union coverage.

If you think your employer is required to provide equivalent benefits and is not doing so, you can contact the Attorney General's Office toll-free at 800-649-2424.