Need opinions on coverage risks and COBRA

[Surfdaddy]

Megacorp is downsizing and has offered those with many years of service a voluntary separation package. Part of this package is that they will pay our COBRA premiums through the end of 2008. Before that time I should have gotten another job or would be able to get private insurance or coverage through HIPPA.

I'm 51, and have two kids in 8th and 10th grade, so health care is critically important. We're expecting my daughter to need a surgery next summer which will probably run around $80K.

I've been already offered a new position at a startup. I'd be CEO of a small company bankrolled by an affluent individual. He owns many other companies as well, and I don't fully understand yet all of the business details of his holdings.

He has said that I can have any insurance I want, he will cover it. But since it is a startup, here is my concern. I understand that COBRA eligibility applies to companies of 20+ individuals. This is a startup company and would be well under 20 for the forseeable future. Also, as a startup, it is risky. If something didn't work out in, say, a year, then would I have no recourse to getting another health plan since I didn't have COBRA eligibility? This could be a deal breaker, as the alternative is that I look for a company of over 20 people to ensure continuing COBRA eligibility. I can't risk becoming uninsurable. Although we're all basically pretty healthy, my wife and I each have some potential issues that might incur costs (in my case surgery) over the next few years.

It would be shame to pass up what would otherwise be a great opportunity. Any comments/ideas appreciated.

 

[Martha]

Some states have miniCOBRA laws that apply to businesses with less than 20 employees. California is an example. So you might check on that. But, you said that you can have any insurance you want, he will cover it. This implies that you will be purchasing a non-group plan and he will simply reimburse you the premiums. Is that right? If so, you have few rights. And your family might not be insurable except through your COBRA benefits from your former employer and whatever HIPAA qualified plan or risk pool required in your state when COBRA expires.

Assuming your new employer means you will have a group plan through your new employer, even if your state does not have a miniCOBRA, you still have HIPAA rights to buy insurance if you lose the group plan, provided that you exercise those rights on a timely basis.

If I am being confusing, ask me to clarify. I am feeling kind of dense this evening and I am trying to watch the president on TV while typing this.

Oh, and don't forget to read my signature.

 

[Surfdaddy]

Thanks Martha. I need to clarify whether this would be an individual plan or small group plan. The thing is, my separation agreement with Megacorp entitles me to COBRA for 18 months, but it terminates when I

"become eligible for another employer’s health plan or you or your qualified beneficiaries’ COBRA eligibility terminates for any reason."

So I may be able to DECIDE whether to have coverage in the new company (that is, whether the company offers it at all). A year down the road when Megacorp quits paying my COBRA, I could have the new company start a group health plan, right? If I understand you correctly, the <20 employees just removes COBRA but not HIPPA eligibility, correct? So if I was under a small company group plan and I left that company, rather than having 18 months of a COBRA option, I'd immediately be under the 63 day window to either find a new job, find a private plan, or apply for a HIPPA policy? Doesn't applying for a policy under HIPPA require that you've been found uninsurable with traditional policies? That would mean that 63 days would be extremely tight to prove uninsurability and then put in a HIPPA application.

I may not be understanding this correctly, so please clarify. I may be confused, too -- and I'm not even listening to the president!

 

[ziggy29]

Would it be possible to negotiate yourself a little extra pay in lieu of health insurance coverage from this startup? If they don't offer you the coverage, wouldn't that mean you're still able to stay on COBRA on Megacorp's dime?

 

[Martha]

Thanks Martha. I need to clarify whether this would be an individual plan or small group plan. The thing is, my separation agreement with Megacorp entitles me to COBRA for 18 months, but it terminates when I

"become eligible for another employer’s health plan or you or your qualified beneficiaries’ COBRA eligibility terminates for any reason."

So I may be able to DECIDE whether to have coverage in the new company (that is, whether the company offers it at all). A year down the road when Megacorp quits paying my COBRA, I could have the new company start a group health plan, right?

Yeah, but the timing might be tricky. Be sure to work with a broker well ahead of the time your COBRA expires.

If I understand you correctly, the <20 employees just removes COBRA but not HIPPA eligibility, correct?

Correct.

So if I was under a small company group plan and I left that company, rather than having 18 months of a COBRA option, I'd immediately be under the 63 day window to either find a new job, find a private plan, or apply for a HIPPA policy?

Correct.

Doesn't applying for a policy under HIPPA require that you've been found uninsurable with traditional policies? That would mean that 63 days would be extremely tight to prove uninsurability and then put in a HIPPA application.

Not quite. Under HIPAA there is no need to prove you are not insurable if you are coming off of a group plan and meet HIPAA eligibility requirements. This booklet describes your rights under HIPAA: http://www.healthinsuranceinfo.net/nefe/Understand_Private_Health_Insurance.pdf

 

[Martha]

The search function on this board is not very functional, so even though I have posted HIPAA eligibility rules a number of times, I will post them again:


No matter where you live in the U.S., if you are federally eligible you are guaranteed the right to buy individual coverage of some kind with no pre-existing condition exclusion periods. To be federally eligible, you must meet all of the following requirement:

´ You must have had 18 months of continuous creditable coverage, at least the last day of which was under a group health plan.

´ You also must have used up any COBRA or state continuation coverage for which you were eligible.

´ You must not be eligible for Medicare, Medicaid, or a group health plan.

´ You must not have health insurance. (Note, however, if you know your group coverage is about to end, you can apply for coverage for which you will be federally eligible.)

´ You must apply for health insurance for which you are federally eligible within 63 days of losing your prior coverage.

Federal eligibility ends when you enroll in an individual plan, because the last day of your continuous health coverage must have been in a group plan. You can become federally eligible again by maintaining continuous coverage and rejoining a group health plan.


The problem with HIPAA guarantees is that there is no rate regulation by the federal government and different states have different ways that they comply with HIPAA. States may have risk pools or the state may require insurance companies to offer a specific HIPAA policy. A few states require all insurance companies to offer you a policy with no underwriting (guaranteed issue states). To find out what your rights are in your state, go to Health Insurance Consumer Guides.

If you are not HIPAA eligible but are uninsurable (maybe you had non-group insurance and the policy is canceled or you move from the service are or are otherwise uninsured) then states differ on what is available to you. Some states have nothing to offer. Other states have risk pools. Other states have guaranteed issue policies. In any event, most all the states have a waiting period before pre-existing conditions are covered. But if you are in fact HIPAA eligible, there is no waiting period.