Anticipate End of COBRA to Maintain Health Insurance

COBRA is a federal law that allows individuals to purchase the health insurance their employer formerly provided. Standard COBRA rules give employees 60 days to decide to purchase insurance by paying its full cost for up to 18 months.

Federal legislation lengthened access to COBRA coverage and paid 65% of its cost for qualifying participants during the recession, but those extensions will be allowed to expire as the economy recovers.

Take action

Doing nothing as COBRA coverage expires is the biggest mistake consumers can make, according to Ankeny Minoux, president of the Foundation for Health Coverage Education (FHCE), San Jose, Calif. FHCE offers easy-to-use information, including a state-by-state review of public programs, to help people learn more about health-insurance options.

"Start looking at alternate options anywhere between 30 days and 60 days before your coverage is about to expire," Minoux urges.

Contact your existing insurance company to learn about options for converting your employer-based coverage to a private policy. At the same time, you can contact other providers to examine their products.

Key issues to consider include: What is covered, including services and health-care providers What is excluded, including waiting periods and pre-existing conditions Deductible, or the amount you must pay before insurance kicks in Co-pay amounts, or your share of ongoing health bills Maximum limits, or the total amount insurance will pay for either a specific episode or lifetime claims.

Minoux notes it's important to budget based on each item on the list, not just the monthly premium. "Budget every month for the 'what if you have to use it' scenario and make sure you have those reserves on hand," Minoux advises.

Chronic complications

Finding insurance is more difficult if you have a chronic condition that might prompt a private insurer to reject you or require a waiting period for coverage of pre-existing conditions.

"Maintaining creditable coverage is a concern for any individual, but to a person with a diagnosis of a progressive disease, it is critical," says Erin Moaratty, chief of external communications for the Patient Advocate Foundation (PAF), Hampton, Va. PAF is a nonprofit organization that helps people with chronic conditions work with insurers, employers, and creditors.

Options may be scarce for people with chronic conditions when COBRA ends, Moaratty says. The best option is picking up new coverage through an employer, yet even employer-based coverage may include waiting periods or exclusions. Preventing a gap in coverage is essential.

If it's possible that a chronic condition could become disabling, Moaratty advises people to apply for disabled status with the Social Security Administration before COBRA runs out, since disability status triggers a special COBRA extension. And, disability status takes time and can be difficult to establish. Disability determination can be made before the 18-month period ends, but you must have had your disability during the first 60 days of coverage.

Get access

Federal and state programs help consumers get access to insurance, although the resulting policies may carry a high price tag.

On the federal level, the Health Insurance Portability and Accountability Act (HIPAA) gives people the right to purchase coverage without being subject to denial or exclusions if the applicant lacks access to other group plans and COBRA options have run out. HIPAA-related insurance applicants must apply within 62 days of the end of COBRA coverage.

Many states have passed "guaranteed access" laws requiring insurance companies to offer coverage to all applicants. Rules vary by state and circumstances. Some states also offer special insurance plans for high-risk individuals. The Georgetown University Health Policy Institute, Washington, D.C., offers "guides" that describe rules and options in each state.

The federal government and many states work together to ensure that children have insurance coverage through the State Children's Health Insurance Program (SCHIP) and Medicaid. Check the program's online map for a description of coverage in your state. Families with annual incomes as high as $88,000 can participate in some states.

Moaratty also recommends searching for programs aimed at special groups. For example, state programs established under the Breast and Cervical Mortality Prevention Act cover screening and diagnostic services for uninsured women, as well as Medicaid coverage for women diagnosed with either form of cancer who follow specific protocols. Search online or contact your county health department or health providers to learn more about options.

'Mix and match' coverage

Taking time to mix and match public programs and private insurance can help families who cannot afford to buy a single policy to cover everyone.

For example, a family of four might decide that the father can cover his chronic condition with insurance purchased under federal rules, while the mother could take a part-time job to gain access to private coverage under a group plan. The State Children's Health Insurance Program could cover their children.

"Look into all the options that are available and find out if you are eligible, how the application process works, and what you need to do to sign up," Minoux says. "Any type of mix and match that fits the budget is out there."

Transition guidelines

While searching for coverage can be intimidating, Minoux says most people have more options than expected. The challenge is sorting through them to match the cost and coverage to your needs.

"Try to be proactive about making that health coverage decision and getting your family set up with good coverage that works," Minoux says.

Published May 24, 2010