As the first and largest group of individuals this month prepares to roll off the government’s 15 months of COBRA subsidy, employers can help ease their transition by sharing information.
Most employers have compassion for their former employees and would like to help them find affordable coverage once their COBRA subsidy, or COBRA coverage itself, expires. But experts also point to practical reasons for helping.
“It’s been a tough couple years for employees and employers alike. So many of us – or else our friends and relatives – have lost our jobs,” observes Wendy Nice Barnes, vice president of Human Resources, eHealthInsurance Services, Inc.
“Employers are benefited by going the extra mile to make sure their former employees understand their choices in times like this. If the economy picks up again, for example, you may want to hire some of those workers back. And your HR department can be spared a lot of headaches by putting guidance like this together beforehand and communicating it to COBRA enrollees when the time comes," she adds.
Barnes and company offer the following list to aid employees in their search for health insurance coverage:
For those who have used up their 15 months of COBRA subsidy, they may be able to continue COBRA coverage at full cost (102% of the cost of health insurance). If this is not a financially viable option they have the following choices to fall back on:
- Join their spouse’s employer-based plan as a dependent.
- Purchase coverage on their own. If the individual is relatively healthy, then purchasing individual coverage in the private market is a viable option, especially under the new consumer protections as enacted by the health care reform legislation.
- For example, it is now more difficult for the health insurance company to cancel coverage if an individual falls ill, there may be better preventive care, and there won’t be lifetime limits on coverage. Nevertheless, a former employee can still be denied based on a pre-existing condition, a provision that doesn’t go into effect until 2014. Still, many individual and family health insurance plans cost significantly less than COBRA, though the coverage levels may differ somewhat.
- Consider short-term health insurance. This option may be appropriate for an individual who was recently hired but whose health insurance benefits have yet to kick in or if they expect to have employer-sponsored coverage through a spouse in the next six months. Certain caveats remain: pre-existing medical conditions won’t be covered, nor will prescription drugs or preventive care. Most short-term plans only provide coverage in case of serious injury or hospitalization.
- Educate them about their HIPAA rights. Relevant for those with pre-existing conditions, HIPAA qualifies them for some type of continuous coverage depending on their state of residence if they can prove that they’ve maintained qualified health insurance coverage for a certain period of time without a gap of more than 62 days. Whether through a State Risk Pool, a Carrier of last resort or certain plans covered by certain carriers, each state offers at least one guaranteed issue plan for persons protected by HIPAA, though it may be expensive.
- Barnes recommends that individuals learn more about their HIPAA rights by talking to a licensed agent or the non-profit Foundation for Health Coverage Education.
- If a child has a pre-existing condition, they cannot be denied coverage due to a PPACA provision that goes into effect in September. To maintain coverage until then, parents could purchase individual, short-term insurance. Though this insurance may not provide full coverage, it can be easier to qualify for than a regular policy.
- Start a business. There are no denials for pre-existing conditions with group insurance, which is defined as one or two employees, depending on state laws. Further, tax credits are available starting later this year for up to 35% of what a qualifying business spends on its health insurance premiums.
- For instance, businesses with fewer than 10 employees who earn an average wage of less than $25,000 per year qualify for the full benefit.
- Look to government-sponsored options. Another option for those with a pre-existing medical condition, or for low-income persons, is government-sponsored health insurance. There are state high-risk pools available for people in most states and the federal government will strengthen these high risk pools beginning this summer as a result of health care reform.
- Options in this category may also include HIPAA, which will pay COBRA premiums in certain cases, and CHIP programs that provide health insurance coverage for children of families that meet specific income criteria.
- Individuals may also be able to save funds on private pay by getting a quote from their doctor, up front. For complex procedures, such as surgery, there can be separate charges for the facility, surgeon, anesthesiologist, supplies and more.
- They can also refer to the Health Care Blue Book before agreeing to a procedure and price. This resource will allow the person to see what insurance companies pay their doctors, hospitals, and others in the market. If the Blue Book price is lower, the individual can have more luck when asking for a discount.
“Different companies may have different channels open to them. But you may be able to reach out to COBRA enrollees by email or mail, or else through the COBRA administrator hired by the company to manage its COBRA rolls. What you don’t want is panic, with lots of former employees and their dependents worried about what to do next," Barnes adds.
"Make sure they understand when their federal subsidy or COBRA coverage expires. Make sure they understand that they’re not entirely without options. HR managers should make it clear where to turn for information and resources, whether the Foundation for Health Coverage Education’s hotline or Web sites for licensed health insurance agencies."
