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Merritt Personal Lines Manual: HIPAA and COBRA

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 the insured 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 the insured's COBRA coverage is about to expire and the insured anticipates getting another job that provides health insurance soon, the insured may want to consider a temporary insurance policy. A temporary medical policy is fairly limited, but it will protect the insured from catastrophic medical expenses. It usually will have a deductible; after that, it will reimburse the insured for a percentage of the insured's costs. Some plans will reimburse the insured on a percentage basis up to a set amount (sometimes $5,000), then pay 100 percentof the insured's 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 the insured 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 coverage for injuries incurred in a war (the insured should be covered by the military, if the he or she 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 the insured get when not in a hospital, treatment outside the United States -- and the list goes on.

In addition, if the insured purchase 120 days' worth of temporary medical coverage and get a job in 30 days, the temporary insurance cannot be canceled. (Ordinarily, if the insured had some other sort of medical insurance, the insured could get the unused portion that the insured have paid for refunded.)

However, there is probably a probation period with the insured's new employer, during which the insured is not eligible for the company's medical plan. So, a temporary policy to tide the insured over for that period may be worth the money.

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