Money Magazine (New York) - Worried about losing your job? You're hardly alone.
Some 4.5 million individuals lost their jobs this year, according to the latest survey by the Bureau of Labor Statistics. And of course, for many, losing their jobs meant losing valuable health care coverage, too.
That's because under COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986), if your company employs 20 or more people, it is required to offer you insurance for up to 18 months. But there is a downside: You may have to pay up to 102 percent of the premiums rather than the approximately 27 percent you paid, on average, while you were employed. (The extra 2 percent covers administrative costs.)
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A smart idea: Determine what your premiums would be while you still have your job. "If budget is going to be an issue, it's better not to be surprised by the bill," advises Jennifer Ridley-Hanson, a Madison, Wis. financial planner. You may prefer to save for the extra expense or simply to choose a cheaper plan now, while you have the chance.
If you are married and your spouse also works, you now have a real incentive to scour both open-enrollment packages. "Pick the plan of the spouse most likely to stay employed," Ridley-Hanson suggests. While you're at it, see if your spouse can add you to his or her policy at any time, or just during open-enrollment periods.
A new boss
Many others are less worried about losing their job than they are about changing employers - which would force them to choose a new health plan.
But if you or a family member is hard to insure owing to a pre-existing health condition, you've got rights you may not know about. HIPAA (the Health Insurance Portability and Accountability Act of 1996), which goes into full effect this year, is a series of health insurance market reforms enacted by Congress in response to, among other things, fears that the people who most need their coverage wouldn't be able to keep it.
Previously, a new insurer was allowed to deny coverage for any condition, such as diabetes, that had been diagnosed before you joined the plan. Now, HIPAA guarantees that you or your dependents cannot be denied coverage in a new group plan based on prior health experience.
If you've had insurance in a group or individual plan for 12 straight months, with no lapses in coverage of 63 days or more, then all of your medical needs must be addressed as soon as you enroll in any new group plan. If you do not have the required 12 months of coverage, your new insurer can refuse to pay for any of your pre-existing medical problems, but only for a maximum of 12 months.
Unfortunately, HIPAA will not help people moving from a group to an individual plan. And it doesn't eliminate the normal waiting period (often 30 to 90 days) that many health plans require. To maintain your eligibility for future group health benefits, be sure to purchase COBRA coverage if you expect to be out of work for any length of time.
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