|
|
|
|
|
U.S. Department of Labor
June 2002
|
|
The Department of Labor’s Employee Benefits Security Administration (EBSA) administers the Employee
Retirement Income Security Act of 1974 (ERISA), which governs pension plans
(including profit sharing and 401(k) plans) and welfare plans (including health,
disability and life insurance plans). ERISA also includes the
health coverage continuation and portability provisions of the Consolidated
Omnibus Budget Reconciliation Act (COBRA) and the Health Insurance Portability
and Accountability Act (HIPAA). This information sheet focuses on job loss
and its effect on workers’ health benefits.
|
|
When facing job loss or a
reduction in hours, workers need to know their rights and options ahead of time
to prevent these situations from meaning an end to their health coverage.
|
|
There may be several options available to individuals who are losing their
health coverage as a result of losing their jobs:
|
|
Special Enrollment in Another Group Plan
If other group health
coverage is available (for example through a spouse’s employer provided plan),
special enrollment in that plan should be considered. It allows the
individual and his/her 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.
|
|
COBRA Continuation Coverage
If the individual’s employer
continues to operate and offer a group health plan, COBRA continuation coverage
may be available. COBRA, which generally applies to employers with 20 or more
employees, allows the individual and his/her family to continue the same group
health coverage at group rates. An individual’s cost for coverage may be
higher than what the individual was paying before (and is usually higher than
the cost for coverage under special enrollment in a spouse’s plan), but
generally the cost is lower than that for private, individual health insurance
coverage. The plan should send a notice regarding the availability of COBRA
coverage. After this notice is provided, the individual generally has 60
days to elect coverage and it is then available retroactive to the loss of
coverage. (Note: Once an individual has elected COBRA, he/she won’t be
eligible for special enrollment in another group health plan, such as a
spouse’s plan, until all COBRA coverage available is exhausted.
Therefore, it is important to consider special enrollment in another plan
promptly.) COBRA coverage typically lasts 18 months, but may last longer
in certain circumstances.
|
|
Health Coverage Through a Government Program
Health coverage may be
available to certain qualified individuals through the State or Federal
Governments. Information on government programs such as Medicaid (for
low-income individuals and individuals with special needs), State Children’s
Health Insurance Program (for children of qualified families), or Medicare (for
people aged 65 and over, and for certain people who are disabled or have end
stage renal disease), is available through the State Insurance Departments or
the U.S. Department of Health and Human Services, Centers for Medicare &
Medicaid State Operations at 1.800-MEDICARE.
|
|
Private, Individual Health Insurance
The last option for an individual to
consider is private individual health insurance coverage. Individuals may
qualify for guaranteed access to such coverage, without any pre-existing
condition exclusions, if:
-
They had health coverage for at least 18 months without a significant break in
coverage (generally a break in coverage of 63 days or more) and the most recent
period of coverage was under a group health plan;
-
Group coverage was not terminated because of fraud or failure to pay premiums;
-
They either were not eligible for COBRA continuation coverage (or similar State
program), or if eligible for COBRA coverage (or similar State program), they
both elected and exhausted COBRA coverage, and
-
They are not eligible for other health coverage.
|
|
Even if they do not meet these
criteria they may still be able to obtain coverage. The cost of individual coverage is often higher than
similar coverage under a group health plan obtained through special enrollment in another group plan
or COBRA. More information on individual health coverage is available from the State
Insurance Commissioners or the Department of Health and Human Services, Centers for Medicare and Medicaid
Services at 410.786.1565 or www.cms.gov.
|
|
Note: When considering health
coverage options, individuals should examine the scope of the coverage
(including benefit coverage and limitations, visit limits, and dollar limits),
premiums, cost sharing (including co-payments and deductibles), and waiting
periods for coverage. For information on the coverage through a particular
group health plan, the worker should call the plan administrator and request a
copy of the plan’s Summary Plan Description.
|
|
The free publications listed below
provide more information about rights to coverage:
|
|
You may call EBSA's Toll-Free Employee & Employer Hotline number at
1.866.275.7922 to request copies of these publications. If you have
questions about these options you can call the toll-free Hotline or email
EBSA. For more information about rights
to coverage, visit our Web site.
|
| |
|
