Group Health Insurance

Federal Regulations Govern Portability

Written by Nancy Sinatra

The vast majority of Americans who have health insurance are provided coverage through the group health insurance policies of their employers. When these workers change jobs or lose their jobs, their coverage can change or be lost. The federal government has enacted regulations that help workers retain coverage if they lose their job, and more easily keep and obtain coverage when they change jobs. According to recent studies, about 60 percent of all Americans who have health insurance receive it through their employer. The average American can be expected to change jobs about three to five times in his or her lifetime, according to the Department of Labor, so making provisions for people to maintain coverage during gap periods between jobs and to make changing insurance as employees change jobs easy is an important public policy goal. Problems can come up when employees change jobs because insurers may have differing rules concerning pre-existing conditions, medical screening and other issues. HIPAA The Health Insurance Portability and Accountability Act works to protect the group health insurance of employees when they lose or change jobs. Title I of the act sets rules regarding the availability and breadth of employer provided group health plans and some individual health insurance policies too. Under HIPAA, the time period under which a new employer's group health plan can refuse to provide benefits relating to pre-existing conditions is reduced. In general, a group health plan can refuse coverage related to pre-existing conditions for a year after the new employee enrolls in the plan. However, if the employee had health insurance prior to enrolling in the new employer's plan, that time period is shortened. HIPAA allows new employees to shorten the exclusion period by time period that they had creditable coverage before enrolling in the new plan. The act includes coverage from group and individual health plans, and government health insurance plans such as Medicare and Medicaid in its definition of creditable coverage. Some limited coverage plans may be exempt from this, however. Also, if a person had a break in coverage of more than 63 days, he or she can only count the amount of time he or she was covered under another plan after that break toward shortening the exclusion period. For example, if you got a new job on Jan. 1, 2010 and were enrolled in a new plan that day, the insurer would look at your coverage history to see whether you fell under the exclusion for pre-existing benefits, and how long they have to make that determination. If you were covered from Jan. 1 2008 to March 1, 2009, but were then unemployed without coverage until mid-June, the exemption period would only be from when you got the new job and benefits in June until Jan. 1, 2010. COBRA The Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, was passed in 1985 and, among other things, helps employees who have lost their jobs maintain their employer-provided health insurance coverage. In general, the law imposes an excise tax on employers with more than 20 employees who provide health insurance coverage who do not allow employees who lose their jobs under a qualifying event to maintain their coverage. Employees are allowed to maintain their coverage by paying for it. Qualifying events include layoffs, strikes, terminations (except for gross misconduct) medical leave and divorce. Employees are allowed to keep their coverage for up to 18 months after the qualifying event. As of 2006, only about 10 percent of people eligible to use COBRA to continue coverage did, largely because employees had to pay the entire cost of their premiums under this law, instead of just paying the employee share as they did when they were employed. The stimulus package approved by Congress in 2009 provides a subsidy of up to 65 percent of the cost of coverage for employees. Bills to continue this subsidy after the stimulus package expires have been introduced into Congress. As the economy continues to sputter, and as unemployment reaches 10 percent, many workers have become concerned about their group health insurance benefits and how a job loss or change of job would impact these benefits. When changing jobs or evaluating your options after losing a job, it's important for employees to understand their rights under federal laws like HIPAA and COBRA. Consulting with your company's human resources manager can help you evaluate your options and make the choices that are correct for you and your dependents.

 

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