Keep My Health Insurance
When facing job loss or a reduction in hours, employees need to know their options ahead of time to prevent loss of health coverage. There may be several options open to individuals who are losing their health coverage when they are laid off from their jobs. The options are summarized below.
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Special enrollment in another group plan
If other group health coverage is available to you (most often through a spouse's employer-provided plan), special enrollment in that plan should be considered. It allows the individual and family an opportunity to enroll in a plan for which they are otherwise eligible, regardless of enrollment periods. However, to qualify, enrollment must be requested within 30 days of losing eligibility for other coverage. After special enrollment is requested, coverage is required to be made effective no later than the first day of the first month following your request for enrollment. This type of coverage is usually the most cost-effective of all the options.
Extending health benefits through COBRA
If your employer continues to operate and offer a group health plan, COBRA continuation coverage may be available. (COBRA is authorized under the federal Consolidated Omnibus Budget Reconciliation Act.) COBRA, which generally applies to employers with 20 or more employees, allows you and your family to continue the same group health coverage at group rates. Your cost for coverage may be higher than what you were paying before (and is usually higher than the cost for coverage under special enrollment in a spouse's plan), but generally the cost may be lower than that for private, individual health insurance coverage.
Your health plan should send a notice regarding the availability of COBRA coverage. After this notice is provided, you generally have 60 days to elect coverage, and it is then available retroactive to the loss of coverage. COBRA continuation coverage typically lasts 18 months, but may last longer in certain circumstances.
NOTE: Once you have elected COBRA continuation coverage, you will not be eligible for special enrollment in another group health plan, such as a spouse's plan, until all COBRA coverage is exhausted. Therefore, it is important to consider special enrollment in another plan promptly.
Health coverage through a government program
Health coverage may be available to certain qualified individuals through the state or federal government. Information on government programs, such as Medicaid (for low-income and individuals with special needs), state health insurance for children of qualified families, Medicare (for people age 65 and over and certain people who are disabled or have end-stage renal disease) is available through the Kentucky Department of Medicaid Services or the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services at (800)-MEDICARE.
Private, individual health insurance
Another option to consider is private, individual health coverage. The cost of individual coverage may be higher than similar coverage under a group health plan obtained through special enrollment in another group plan or COBRA.
The Health Insurance Portability and Accountability Act (HIPAA) gives individuals who are losing group health coverage and who have at least 18 months of creditable coverage without a break in coverage of 63 days or more the right to buy individual health insurance coverage that does not impose a pre-existing condition exclusion period. For this purpose, most health coverage, including COBRA continuation coverage, is creditable coverage. These special rights may not be available to you if you do not elect and receive COBRA continuation coverage.
More information on individual health coverage is available from the Department of Health and Human Services, Centers for Medicare and Medicaid Services at (410) 786-1565 or www.cms.gov.
Know Your Retirement Plan – ERISA
The Employee Retirement Income Security Act of 1974 (ERISA) provides guidance for employers who have retirement plans and gives you specific rights to request a copy of your plan's Summary Plan Description (SPD) and ask for an individual benefit statement. The SPD tells you if and when you can collect your benefits or how to roll over your 401(k) account to a new employer's plan or to an IRA (if your old plan permits you do to so). The individual benefits statement lets you monitor your account balance and is an important statement to keep on file.
The free publications listed below provide more information about options for coverage. They are available at www.askebsa.dol.gov or by calling EBSA's toll-free number at (866) 444-EBSA (3272) to request copies.
- Pension and Health Coverage ... Questions and Answers for Dislocated Workers
- Questions and Answers: Recent Changes in Health Care Law
- Health Benefits Under the Consolidated Omnibus Budget Reconciliation Act (COBRA)
- IRS Notice 98-12: Deciding Whether to Elect COBRA Health Care Continuation Coverage After the Enactment of HIPPA
- What You Should Know About Your Retirement Plan
If you have questions about your rights and responsibilities under COBRA, HIPAA and ERISA, call (866) 444-3272 and ask for a Benefits Advisor.