ARE YOU COVERED? Health Insurance Answers When Employer-Based Insurance Goes Away

By: Liz Kennon

In today’s economy, many employers are choosing not to offer health insurance to their employees.  Many people find themselves without a job with benefits.  Others are branching out into the world of entrepreneurship and have to figure out how to get covered for healthcare without traditional group benefits.  The importance of having health insurance may fall to the bottom of the list of immediate needs, but going uninsured can lead to very drastic and long-lasting financial consequences.  If this article can teach you anything it is this: do NOT wait to get health insurance until you need it.  It is often times too late to get affordable coverage after you have any sort of medical treatment, so be proactive!

So what do you do if you have recently lost traditional group coverage through your employer, whether because of job loss or a decision to start your own business?  First, check out your Cobra option.  If your old employer offered health insurance, you can continue on that coverage for 18 months, but you will be paying the full premium instead of sharing it with the employer.  This can be pretty expensive so, if you are in good health, look into getting a medically underwritten individual policy.  These are policies offered by insurers like Highmark, UPMC and Health America and offer a number of structures with varying levels of deductibles and coinsurance.  There is a 12 month pre-existing condition clause (except for the UPMC plans) during which the insurer will not cover existing conditions.  They can be very affordable and rates only go up gradually at different age grades – rates are not affected by submitted claims so if you are healthy now, this is the perfect time to get into one of these plans!  If you are going through a divorce and losing coverage, these same options are available, except that Cobra is available for 36 months instead of 18.

If there are medical conditions, and Cobra has either run out or is not available, there are a few other options other than the medically underwritten plans (for which you would likely be denied).  If your employer plan was with Highmark, you can go into a conversion plan.  The coverage will cost $500-$600 per month but it is good coverage and there is no 12 month pre-existing condition clause.  You must convert within 2 months of leaving your employer’s plan.  If you are not coming out of a Highmark plan AND you were on employer coverage for at least 18 months, you can get a HIPAA policy through Highmark which eliminates the pre-existing condition clause, but is very expensive at about $800 per month.  If you have been uninsured for at least 6 months, you can qualify for the PA Fair Care plan, a fairly affordable plan instituted as a part of Health Care Reform to help bridge the gap until 2014 for uninsured Americans with pre-existing conditions.  Go to www.pafaircare.com for more information.

If you are a small business owner with employees, you may want to offer health insurance benefits.  To explore this option, contact a health insurance broker who can help you get rate quotes from local insurance companies.  There are some rules and things to know about looking into small group coverage:

• The employer must cover at least 50% of the premium for her employees.
• The more covered employees, the better the rates.  The employer would be on the plan as well.
• There are rules about who can participate in the employer plan and what % of employees must participate.
• There are no pre-existing condition waiting periods and no employee can be denied, but rates will be based on health questionnaires completed by all employees to be covered.

I want to include a brief note on Health Care Reform.  There are many features of Reform already in place that you may not realize are available.  You may now keep your children on your health insurance until they are 26, regardless of if they are a student or even married.  Also, children under 19 cannot be denied due to pre-existing conditions.  All preventive visits are now covered at 100% with no deductible or coinsurance for insured individuals.  This includes annual physicals, routine lab work, child wellness visits and immunizations, annual OB-GYN visits, mammograms, colonoscopies, etc.

If the proposed Health Care Reform Act is not overturned, medical underwriting will go away and insurers will no longer be able to deny applications based on pre-existing conditions.  Premium rates can only be affected by the age of the member, their geographic location, and whether or not they are a tobacco user.  All individuals will have to have insurance or pay a penalty.  Employers with more than 50 employees will also have to offer insurance or face fines.

Please contact Liz Kennon, licensed health care broker of Kennon Insurance Consultants, to review any of the options described in this article or with any additional questions at 412-913-4220 or lkennon@kennoninsurance.com.