Retirees and COBRA

[Independent]

I've looked at various COBRA threads and online sources, but I haven't found this set of circumstances:

I retired in 2006 at age 59. My employer's policy at that time was to allow retirees to stay in the same health plan as active employees, at the same premium. This was a good deal since the company payed about 80% of the premium.

Late in 2008, we got a notice that said the company "can no longer afford to subidize retiree health care". However, we could stay in the same plan as active employees as long as we paid the full premium. I took that option.

Recently I got a letter saying the company "can no longer afford to keep retirees in the active employee health insurance plan". They are pushing us out, and offering something called Retiree Health Access through AETNA. It looks like a pool designed expressly for this situation, so the premiums are a lot higher.

The numbers are:
2009 company plan - $16,600 premium, with $1,500 max out of pocket limit.
2010 RHA plan - $21,500 premium, with $5,000 max out of pocket

If COBRA is available on the company plan, then it would be the better option. But, I haven't found anything that says they have to offer us a COBRA extension.

My description of what's happening is there's an "event" which is they are changing eligibility rules for the employee plan, and we are in the group that is no longer eligible. I can't find that COBRA is required for anybody (either retirees or active workers) who get pushed out that way.

Any comments on COBRA? Have I fallen through a crack?
Any personal experiences with AETNA or AETNA's RHA?


Note: My wife wouldn't qualify for standard individual insurance due to health issues that came up last year.

 

[Martha]

Don't take my word for it, but I believe that COBRA does not apply in this circumstance. As you can see, none of the qualifying events apply to you as you are no longer an employee. COBRA would have likely given you only 18 months anyway (unless you live in a state that tacks on some more months).

You might look at the Health Insurance and Coverage Help for Consumers Everywhere guide for your state and see if there are any special rights available in your state or if HIPAA might apply to you to give you one or more alternatives to the AETNA plan. Long shot though as I question whether HIPAA applies to you because of the offered plan may be considered to be continuation coverage.

 

[mickeyd]

I can't find that COBRA is required for anybody (either retirees or active workers) who get pushed out that way.

Back in the day I used to administer a number of COBRA plans for various firms that we did business with. I have not stayed up with the COBRA rules/regs since I left, but it sounds like you were not actually on COBRA, probably just a plan that the employer set up for retirees like yourself. COBRA for retirees generally has an 18 month limit and the rules are quite specific as it's based on federal law.

 

[Coach]

Independent, I am very sorry to hear this news. It must throw a monkey wrench into the planning you did for retirement. I too remain on my former employer's health insurance, paying the full premium, and worry that the same thing could happen to me.

Coach

 

[RonBoyd]

Independent, I am very sorry to hear this news. It must throw a monkey wrench into the planning you did for retirement. I too remain on my former employer's health insurance, paying the full premium, and worry that the same thing could happen to me.

Coach

Diddo for DW. She has another four years until Medicare kicks in.

 

[Independent]

Thanks for all the responses.

Martha, I'm afraid that you see it the same way I did. I was hoping that I was missing something.

In this case, the COBRA would have been a better deal for the 18 months (which would have made it to my 64th birthday and my wife's 63rd). I checked the high risk pool for my state, and it looks like their premiums are better than the group plan the company is offering. But I can't use them because the company is offering me a new group plan.

I can see the same COBRA gap for active workers. My company used to offer group health to part time workers. If they changed their policy and said only full time were eligible, I think those part time workers wouldn't have a COBRA option (unless they quit, which is kind of odd).

 

[Gearhead Jim]

As a United Airlines retiree, I'm in a similar situation. UAL wanted to completely drop all retiree medical coverage during their Ch 11; the judge required them to keep it but we now pay more of the premiums. Rumor has it that there is a 5 year limit on the judge's health insurance requirement, that would expire after I turn 65 next summer but DW would still be 63. And of course, United could simply disappear from the radar screen this winter.

We could bite the bullet on premiums for the relatively short time necessary, if there is any coverage available at all. If all coverage gets dropped by company decision or company liquidation, would any Cobra be available?

 

[Midpack]

Only you can answer for your company & state. The company I'm with offers COBRA for up to 18 months after an employee retires (or other separation) - PERIOD. I'd be surprised if there is any reg that requires your former employer to offer COBRA despite the (attractive) options they provided until recently. Best of luck.

If it makes you feel any better, I'd have been thrilled if I had gotten any sort of subsidized health care benefits in retirement for even a few years, it's rare and becoming more so.

 

[Stevewc]

It is possible the new legislation being developed in congress now may make a difference. But those differences may only apply after the date it passes. I did see one clause that would extend cobra longer than 18 months should it make it through the legislation and into the bill/law. The extension was to allow time to develop the new insurance changes, what ever they turn out to be?
Its all up in the air for now and not at all sure it would help you in any way. You may want to keep an eye on it and look into the different possibilities.
Steve

 

[Independent]

We could bite the bullet on premiums for the relatively short time necessary, if there is any coverage available at all. If all coverage gets dropped by company decision or company liquidation, would any Cobra be available?

I'm not the expert here, but it seems that COBRA allows you to stay in an existing group plan. If the company liquidates and there is no plan even for active workers, the whole COBRA concept fails. If they just push the retirees out of the plan, it seems you'd be in situation as Martha sees it.

In my case, the company offered retirees an alternate group plan. Because of that, I can't get into my state's high risk pool. I'm pretty sure that I'd be better off in the high risk pool than in the group plan the company is offering.

 

[ERD50]

In my case, the company offered retirees an alternate group plan. Because of that, I can't get into my state's high risk pool. I'm pretty sure that I'd be better off in the high risk pool than in the group plan the company is offering.

Is there any chance of getting the company to "un-offer" the group plan in states where the state high-risk pool is cheaper? This sure would be more straightforward if these plans were national rather than state.

This could end up affecting me also. My MegaCorp allows us to stay in the group plan, but we pay almost the entire premium. On one hand, I figured it's not much cost to them, so pretty safe. OTOH, your experience indicates that us retirees are a higher cost group (no surprise), so probably drive up the overall cost of the program, so we could be a target. I keep telling myself that is minimal risk - my logic is there can't be all *that* many people that left before 65 with the credits they need to stay in the plan, that didn't go get a job or get coverage under their spouse plan. And they are out at 65. I figure the numbers are small enough (and dwindling) to not attract attention, but who knows?

-ERD50

 

[Stevewc]

I found an interesting paper on the up coming legislation. This is a good write up on the issues. Notice the last 4 paragraphs, that section has information I have alluded to in the past about possible cobra extensions in the Bill.

As reform debate resumes, 'public option' back at center | Business Insurance

Just wanted to show some documentation on my point.
Steve
PS. Still not sure this would help the OP in this thread but hopefully will help someone.

 

[Martha]

Steve, I wonder which of these proposals will fly as they are all very expensive for employers, especially the prohibition on changing retiree health plans without a corresponding change in the plan for current workers.

 

[Independent]

Is there any chance of getting the company to "un-offer" the group plan in states where the state high-risk pool is cheaper? This sure would be more straightforward if these plans were national rather than state.

This could end up affecting me also. My MegaCorp allows us to stay in the group plan, but we pay almost the entire premium. On one hand, I figured it's not much cost to them, so pretty safe. OTOH, your experience indicates that us retirees are a higher cost group (no surprise), so probably drive up the overall cost of the program, so we could be a target. I keep telling myself that is minimal risk - my logic is there can't be all *that* many people that left before 65 with the credits they need to stay in the plan, that didn't go get a job or get coverage under their spouse plan. And they are out at 65. I figure the numbers are small enough (and dwindling) to not attract attention, but who knows?

-ERD50

Looks like we are/were in similar situations. I intend to ask why they made the offer since it seems that we'd be better off with the high risk pool. It's always possible they could change policies next year. I doubt that I'll get a good answer.

 

[ziggy29]

Steve, I wonder which of these proposals will fly as they are all very expensive for employers, especially the prohibition on changing retiree health plans without a corresponding change in the plan for current workers.

Right. Especially if enrollment is optional, this would introduce a huge potential for adverse selection in a segment of the health insurance market that is already fairly costly to insure. Would it be primarily the otherwise uninsurable who would take it? I'm betting so.

 

[lemming]

Hey I'm now a card carrying member of the uninsurable-go a little easy on us.

A Cobra extension would be a great solution for me. I'd even be ok with increased premium for age groupings.

Corporations do need to get away from the burden of expenses for retirees-I understand that. Tying the retirement bennies to current employees is just another rock around the companies neck.

The OP's original coverage paid by the employer just stunned me -very generous.

What state are you in that has a high risk group with affordable coverage? I might have to move.

 

[REWahoo]

What state are you in that has a high risk group with affordable coverage? I might have to move.

This file has a column showing which states have a high-risk pool. You'll have to Google to find the premium costs and make your own judgment as to whether or not it is 'affordable'.

http://www.healthinsuranceinfo.net/newsyoucanuse/discrimination_limits.pdf