The first step in developing such a strategy is to know exactly what you will be entitled to get and when, regardless of your health status. Once employment ceases (or the benefits of employment, such as in a divorce), federal or state law steps in. If your employer is large enough (at least 20 employees), it will usually be covered by federal laws. If your employer is not large enough to be covered by federal law, then your state law will define what - if any - options you will have available to you.
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| Continuity Of Health Insurance Coverage For Multiple Sclerosis |
If your employer is covered by federal law, you must make a determination when you leave work whether to accept your "COBRA" coverage. Federal law sets the premium, which will be significantly higher than the premium you may have paid while employed. Under COBRA, the employee is responsible for the entire premium plus a 2% administrative charge. After your COBRA rights expire, you have a limited time under the 1996 law, Health Insurance Portability and Accountability Act (HIPAA) to obtain a "guaranteed issue" policy. However, even if HIPAA benefits are offered, there is no guarantee that the benefits will be equivalent, and there is no limit on premium increases beyond what your state may regulate.
In evaluating your options, check to make sure you know what premium you would have to pay for COBRA benefits. If you choose to bypass your COBRA, then you should make sure that any coverage you obtain in lieu of COBRA would itself be continuous. Check renewability and cancellation provisions in individual policies; for group policies, make sure that you know the basis for your own eligibility, and that it is either something you control or which you have satisfactory assurance will continue throughout your life.
Be aware, however, that COBRA is only for limited duration. You should know before you sign up for COBRA what your plan for continuation is once the COBRA is over. If you choose to rely upon the HIPAA plan, you should make sure you understand the exact terms of the plan, including any limitations in the benefits, and the extent to which the insurer can raise premiums over the long term.
Most states have taken steps to provide some mechanism for individuals to get coverage who cannot obtain insurance in the individual marketplace. In some states, your eligibility for a HIPAA plan - no matter how inferior - will disqualify you for any state insurance risk pool.
Thus, a critical set of steps in evaluating your own continuity is to determine - before you have to make the decision about COBRA - what other options for insurance you have. You should check to see what options your state law provides.
States offer various approaches to providing coverage for high risk individuals who cannot otherwise obtain coverage in the private marketplace. In some states, there is a designated "insurer of last resort" (such as Blue Cross) that offers specific plans at specific times of the year for open enrollment. The most common approach, taken by more than half of the states, is the offering of a"high risk pool." States understandably discourage reliance on high-risk pools; these pools are far from a panacea and their characteristics vary greatly from state-to-state. Some states cap enrollment; and most do not advertise their programs.
Over time, these pools are likely to become more financially squeezed and less reliable. All such pools, of necessity, operate at a loss. Only limited revenues are available to states to operate these pools because self-insured employers are exempt from paying into them. Several proposals before Congress would extend the same exemption to small employers. A good long-term strategy, therefore, should not rely exclusively upon a state high-risk pool as a source for health coverage, if at all possible.
As an alternative to a high-risk pool, some states have made it mandatory for insurance companies to issue coverage to small businesses (sometimes as small as one employee), and have restricted the extent to which premium rates can vary based on health status or age. Thus, another strategy for obtaining insurance, depending upon your state's guarantee issue law, would be to start your own small business. To find out more, you can check out Continuity Of Health Insurance Coverage For Multiple Sclerosis.