Your Rights Under COBRA
If you voluntarily or involuntarily leave your job or have your hours reduced, you can continue health coverage under your employer’s plan for 18 months under the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986. This act lets individuals who leave a company buy health insurance from that company at the employer’s group rate rather than the individual rate. Under this law, employers that choose to provide health benefits to their employees and have 20 or more employees must offer you and your eligible family members continued coverage under their group health plan for 18 months after you leave your job. You must activate COBRA coverage within 60 days of receiving the COBRA election form.
You will have to pay the entire premium under COBRA, but the cost may be less than an individual plan and you cannot be turned down for health reasons or pre-existing conditions. If you do not qualify for coverage under COBRA, consider a stopgap or short-term plan. These plans are usually less expensive than an individual health plan and provide coverage for up to 6 months. You may also be able to convert your group health coverage to individual coverage.
Note: Length of coverage varies depending on the type of qualifying event and who is eligible for COBRA. For more information on COBRA, visit the U.S. Department of Labor Web site at www.dol.gov.
Your Rights Under HIPAA
While most individuals think of the Health Insurance Portability and Accountability Act of 1996, known as HIPAA, as a privacy act, it also protects you from losing health insurance coverage when you move from one plan to another.
Before you leave a job, get a “certificate of creditable coverage” from your employer. This provides proof of your health coverage to your new employer and ensures your rights under HIPAA.
HIPAA protects you in several ways:
- If you have had health coverage for 12 continuous months and switch to a new group health plan, the new plan cannot limit coverage of pre-existing conditions.
- If you have not been covered for 12 months, a group health plan can deny coverage for pre-existing conditions, but only up to 12 months. The plan has to deduct any previous health coverage you had from the exclusion period.
- Group health plans cannot deny coverage based solely on your health status.
HIPAA does provide some protection from pre-existing exclusions for individuals buying individual health coverage, but the rules are stricter than for group health plans. To qualify, you:
- Must have had 18 months of continuous coverage under a group health plan.
- Must not be eligible for coverage under a group health plan, Medicare or Medicaid.
- Cannot have other health insurance.
- Must have used up all options for continued coverage, such as COBRA.
- Must not have had coverage canceled for nonpayment of premiums or fraud.
HIPAA says that group health plans cannot deny you coverage based solely on your health. That protection does not apply, however, to individual plans unless you live in a state with a “guaranteed issue” law.
If your state does not have a guaranteed issue law, insurers can refuse you individual coverage if they consider you a high risk. Some states have a “high-risk” pool to provide health insurance for individuals who do not have access to group health plans and who cannot buy individual coverage because of their health problems. Most states limit the premium companies can charge for high-risk policies.
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