LOSING YOUR GROUP INSURANCE? NOW WHAT?

You've just been told your group plan is going away..... and your employer isn't offering COBRA.

Why won't there by any COBRA?

COBRA is a part of the group plan; if the group plan ceases to exist, so does the COBRA. This would apply to someone already on COBRA as well as someone who would normally be eligible for it right now. Anyone currently on COBRA will lose their COBRA when the group plan goes away.

Do I have any other options?

Plenty – as of January 1 2014, healthcre reform has made it impossible to be declined due to pre-existing health conditions. In the past, there were not always a lot of options - but there were a lot of less-expensive health policies to buy if you were in relatively good health.

If you had a pre-existing condition which would render you uninsurable by a regular carrier, you could apply for guaranteed coverage under a law called HIPAA (Health Insurance Portability and Accountability Act, 1996). This type of coverage was offered by most carriers who offered individual plans and was three to five times higher than regular rates would be, since this plan forced the insurance company to take someone they would normally decline, and to cover all conditions. The Affordable Care Act made it mandatory that all carriers now cover all conditions - and resulted in most carriers having to raise premiums 50-100% to accomodate that requirement. It wasn't a surprise to anyone: the Congressional Budget Office announced in 2010 that this would have to happen and it did. The media downplayed this announcement, of course - consumers seeing the new rates for the first time were in for a major financial shock.

Some pre-existing conditions were coverable by most insurance carriers: hypertension (controlled for at least six months with the same medication), high cholesterol, situational or mild depression, etc.  Regular major medical carriers, such as Aetna, Humana, HealthNet, Cigna, BCBS, United Security Life, John Alden, Golden Rule (UHC) would generally accept (and often cover) those conditions with either an exclusion clause or increased premium. HMOs are health maintenance organizations and rarely allowed for any pre-existing conditions, for the most part, especially if there were medications involved. All that changed in 2014.

Many conditions would actually render someone ineligible for coverage; there were simply some conditions that a carrier would not put an exclusion clause (or "rider") on, such as Type I diabetes, obesity, cancer in the last five years (other than basal cell), pregnancy, stroke, heart attack, angioplasty, by-pass, stint, elevated liver enzymes, hepatitis C, ulcerative colitis, fibromyalgia, CP, CF, MS, MD, severe asthma, emphysema, COPD, congestive heart failure, rheumatoid arthritis, sleep apnea, a 'condition of unknown origin'... many conditions. There were a few exceptions... but only a few. 

If you had pre-existing conditions that could get you declined, you could often get a short term plan, which covered you for anything new in the way of illness or injury. There is no coverage for routine check-ups, physicals, maternity or mental health. If you were pregnant, you could not get a short term or any other health plan plan, as a rule – if you are applying for portability (HIPAA), yes; if you could qualify for AHCCCS (low-income), yes; if you were going to another group plan which has enough members on it for maternity to be a required option of the coverage, yes. A medical discount program (not to be confused with a medical savings account), yes. But things have changed and while short term, AHCCCS, and group coverage are still available, anyone can get coverage under the Affordable Care Act (ACA) - so long as they apply during the specific enrollment period. 

The first thing to do if you have lost group insurance (because the group plan itself is going away, meaning you were not offered COBRA) is to check out the benefits on your spouses' group plan, if applicable. If that is not an option, and if you are in reasonable health, you can apply for coverage with any number of carriers, but it would be advisable to get a short term plan to fill in the gap between the group plan and the time it takes for a new plan to go into effect. If you lose creditable (i.e., “real”) coverage through no fault of your own, you have a 60-day window during which you can apply for coverage under the Affordable Care Act.

In July of 2010, Arizona acquired a federal "high risk pool" called PCIP - Preexisting Condition Insurance Plan - which stopped taking application in February 2013 for lack of funding. Then the ACA went into effect in January 2014. This was not voted in by the tax-payers but was mandated by the federal government.  The monthly premiums tend to be high compared to premiums pre-ACA, but in some situations can be offset by a tax subsidy, or advance tax credit, if one's taxable income falls between 133% and 400% of the poverty level.  There is no other qualification to obtain a subsidy, or tax credit, other than income, not being eligible for Medicare or Medicaid, and must be a legal resident. If you earn over 400% of the poverty level, you cannot get a tax subsidy; you pay full price.

Group insurance, on a per person basis, is generally more expensive than individual, since the risk is  greater to the carrier providing that coverage. When an employer with 20-25 employees hires someone who has been recently treated for heart attack, stroke or cancer, who is insulin dependent, has hepatitis C or any one of over 50 other conditions, the premiums for the entire group can increase anywhere from 10% to 40% when the plan comes up for renewal (and these renewal increases are passed on to those on COBRA, since COBRA is part of the group plan - therefore, the rates for the person on COBRA will go up proportionately, also). The greater the risks in the group, the greater the premium to the group. Some group rates have escalated to the point where employers have dropped their plans entirely. Group insurance often seems inexpensive to the employee, because most employers pick up 40%-75% of the premium, if not more. When someone goes on COBRA and sees the premium, they don't realize that this is a dollar for dollar match to what the employer was being charged for that employee's insurance.

Under the "health reform bill" (ACA) signed in March 2010, an employer had to cover 65% of the first nine months of COBRA coverage for an employee who was involuntarily terminated. That benefit went away years ago. Also, if you are on COBRA and the group plan it comes from, goes away, the COBRA does, too.

If you have any questions, or we can be of any assistance, feel free to call our office at 623-435-5511 (in Maricopa county) or 888-543-5637 (outside Maricopa county).