Lost a job? COBRA allows you to retain coverage

WASHINGTON — If you have an employer's plan but are leaving the company:

People leaving a workplace group-insurance plan have some options that others in the individual market do not. First, under the Comprehensive Omnibus Budget Reconciliation Act of 1986, which applies to workers at companies with 20 or more employees, you have the right to continue on your employer's plan for up to 18 months, and in some cases longer. This means you can keep the coverage you had and don't need to worry about being turned down because of illness or a "pre-existing condition."

The hitch is that you no longer pay just the employee share that you probably had to cover when you were on the job. Now you'll have to pay the entire premium and perhaps a 2 percent administrative fee allowed by the law. The amount can top $1,000 a month for a family, based on the average cost to employers of nearly $12,000 per employee for health insurance last year. It's not surprising that only about 20 percent of workers eligible for COBRA coverage take it.

However, if you had a good plan at work, experts said, it's likely to be better than anything you can get in the individual market. Sign up "if you can possibly swing it, especially if you have a pre-existing condition," said Nancy Metcalf of Consumers Union. Not only do you get the coverage you are used to but it also "preserves your right to buy insurance" in the individual market when your COBRA benefit runs out, she said.

Continuing in a group plan, which you do under COBRA, makes you "HIPAA-eligible" when you enter the individual market. The Health Insurance Portability and Accountability Act of 1996 requires states to have at least two policies available without pre-existing condition exclusions. If a state doesn't have those two policies available, then it must set up an assigned risk pool, which is an arrangement under which insurers in the state share the coverage for people unable to buy a policy on the open market. However, HIPAA doesn't regulate what the carriers of the policies can charge, though some states do.

Finally, when considering COBRA and HIPAA options, remember that there are deadlines to be met. You have a right under the law to COBRA benefits, but you lose that right if you fail to exercise it within 60 days of the termination of your group coverage. You have 63 days from the expiration of COBRA coverage to apply for HIPAA-eligible coverage.

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