Hassle-Free Health Coverage: If You Leave Your Job
If you have health insurance through your employer and you leave the job -- whether you're fired or you quit -- the odds are that you will want to keep your coverage for a time.
Under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, which is part of a federal law enacted in 1986, you have the right to keep your coverage at group rates if you lose your group health insurance because of a reduction in your hours of employment or because you leave or lose your job -- unless, of course, you are fired for gross misconduct. You also have the right to continue coverage for your spouse and any dependents.
COBRA only applies, however, to employers with 20 or more employees, at least half of the time during the preceding year.
How long you can keep the coverage depends on your particular qualifying event -- that is, dying, being fired, quitting. Different coverage periods follow each of these events.
If you were fired (for anything other than gross misconduct, in which case you don't qualify at all), you, your spouse and dependent children are entitled to 18 months of continuous coverage.
If your COBRA coverage is about to expire -- assuming you haven't taken another job in the interim that provides group health insurance -- you can apply to the insurance company for conversion from COBRA to an individual policy.
You must do so within 31 days of termination of COBRA.
The company is not obligated to provide you with an individual policy, however, if they only sell group insurance.
Your former employer will not keep paying for health insurance, either. You'll have to start picking up the tab. The company can charge you 102 percent of what the coverage under the group plan actually costs (the extra 2 percent is an allowance to cover administrative costs).
Rest assured that, even with the two points, this amount is almost always less than what you would pay if you purchased your own individual cover-age -- and it is often substantially less.
By law, your employer is required to let you know about COBRA and what steps you must take to retain your health insurance coverage. Your employer also will break down the costs for various coverages you may have, so you can choose to continue all or only some of them -- for instance, you may decide to keep your HMO coverage but give up your vision and dental plan.
The Health Insurance Portability and Accountability Act also made a few changes to the provisions of COBRA, which became effective January 1, 1997.
Now, newborn and newly adopted children of people who have COBRA coverage automatically qualify for the coverage, as long as you can enroll them within 30 days of the adoption or birth. In addition, a disabled COBRA beneficiary is eligible for 11 additional months of coverage if he or she was determined to have been disabled under Social Security at the time of a qualifying event or at a time during the first 60 days of continuation.(The disabled individual must notify the plan administrator of his or her disability status within 60 days of the determination and within the first 18 months of continuation.)
If your COBRA coverage is about to expire and you anticipate getting another job that provides health insurance soon, you may want to consider a temporary insurance policy.
A temporary medical policy is fairly limited, but it will protect you from catastrophic medical expenses. It usually will have a deductible; after that, it will reimburse you for a percentage of your costs.
Some plans will reimburse you on a percentage basis up to a set amount (sometimes $5,000), then pay 100 percent of your costs above that threshold.
A temporary medical policy will pay typical hospitalization costs -- but only for procedures that are medically necessary, at rates that are usual and customary -- as well as recovery costs, including time in a nursing home or in-home visits from a registered nurse.
It often will not pay for any condition you had during the 24 months prior to the start of the policy, or for any self-inflicted injuries or anything that might be covered by workers' comp insurance.
Also excluded are coverages for:
injuries incurred in a war (you should be covered by the military, if you're serving), dental treatment, routine physicals and immunizations, routine pediatric care of a newborn child, normal pregnancy or childbirth, sterilization (or the reversal of sterilization), mental illness, alcoholism or drug abuse, prescription drugs and medications that you get when not in a hospital, treatment outside the United States -- and the list goes on.
In addition, if you purchase 120 days' worth of temporary medical coverage and get a job in 30 days, the temporary insurance cannot be canceled. (Ordinarily, if you had some other sort of medical insurance, you could get the unused portion that you have paid for refunded.)
However, there is probably a probation period with your new employer, during which you are not eligible for the company's medical plan. So, a temporary policy to tide you over for that period may be worth the money.
