Changing Jobs – What About COBRA Health Insurance Benefits?

If you’re lucky enough to work for a firm that offers generous health insurance benefits, especially if your employer is not required to provide COBRA health insurance, you’re forgiven if you’ve delayed looking for a more interesting job or ruled out working for yourself. Fear of parting with employer-sponsored health insurance is legitimate, given the steady decline in the number of companies that offer it and the high cost of paying for coverage yourself.

According to a 2007 report by the Committee for Economic Development, the U.S. employer-sponsored health insurance system is failing. Exorbitant premiums have led to waiting periods imposed on new hires and minimum work-hour rules to qualify employees for coverage. Research published by the Economic Policy Institute in late 2007 shows that only 59.7 percent of Americans still get their health insurance through their employers, with the number of firms offering coverage down 4.5 percent since 2000. So, what’s a nation of highly mobile, ladder-climbing professionals to do when it’s time to clear out their desks?

COBRA

As long as you are not terminated for gross misconduct, you and yours are eligible under COBRA health insurance for continued coverage for up to 18 additional months. That’s good news, because it may take that long to find a comparable job. The bad news is that the continued coverage usually costs a lot more because your employer isn’t paying for any part of it. To opt for COBRA benefits you don’t have to contact anyone. It’s up to your former employer to notify the insurance company of your status within 30 days of your departure, after which they have 14 days to offer you continued coverage, which you have 60 days to accept or decline. COBRA benefits are mandatory at companies with 20 or more employees and you don’t even have to leave your job to qualify for them. A reduction in hours leading to a loss of coverage is also considered a qualifying event. If COBRA isn’t an option for you, consider trying to convert the group plan you were in to an individual policy.

HIPAA

The Health Insurance Portability and Accountability Act was designed with our job-hopping lifestyles in mind. Thanks to HIPAA, if you were enrolled in your last employer’s health insurance plan for at least 12 months without a lapse in coverage lasting more than 62 consecutive days, your new insurer can’t apply “pre-existing condition” exclusions to you, your spouse, or anyone else who was covered under your last plan. Sadly, this rule directly contributes to today’s high deductibles and co-payments. By prohibiting insurance companies from rejecting those with pre-existing conditions, HIPAA causes employers to pass along the higher expense to workers. On the bright side, you don’t have to worry if your spouse and children were covered by your old plan, but aren’t eligible under the new one. HIPAA mandates immediate special enrollment for them through your spouse’s employer’s plan, assuming there is one.

Other options

If you do nothing else, get interim or short-term health insurance. Not only is it risky, health-wise and financially, to go without coverage, but the protections conferred by HIPAA expire after 63 days without insurance and you don’t want that to happen. The protection is worth keeping. If you can’t afford an individual health insurance plan of any duration, check with your state insurance department about subsidized programs.