| A basic knowledge of
COBRA and HIPPA is beneficial whether or not you find yourself
in the position of a lost job or early retirement before you are eligible
for Medicare. This overview of the Consolidated Omnibus Budget Reconciliation
Act (COBRA) and the Health Insurance Portability
and Accountability Act of 1996 (HIPPA) will acquaint
you with the main features of each.
COBRA became law in 1985 and amended the Employee Retirement Income Security Act (ERISA) to provide continuation of group health coverage that would otherwise be terminated. Group health plans for employers with 20 or more employees on at least 50 percent of the working days in the previous calendar year are subject to COBRA.
The following chart provides a summary of Qualifying Events :
The employee, retiree, or family member must notify the plan administrator within 30-60 days of qualifying events. Loss of dependent child status can occur when the child is not in college and reaches age 19; the age limit rises to either 23 or 24 if the child is in college. At either of these events, the child may be entitled to COBRA benefits under his or her own account.
The plan administrator will not necessarily be your employer. It is more likely that a third party administrator will be contracted by the employer to administer COBRA benefits. However, even in this situation, your first point of contact will be the benefits specialist/coordinator where you were formerly employed.
Extended COBRA Coverage
COBRA coverage may be extended beyond 18 months if you worked for at least five years prior to date of termination of employment and are 60 years of age or older. If your employer and health plan allow this extended coverage, you must notify the health plan within 30 days prior to the date your COBRA is scheduled to end.
When COBRA Ends
18 months following date of termination of employment
36 months after the date of any other qualifying event
The date the employer ceases to provide any group health plan to any employee
The first day of a month for which the premium was not paid by the due date (usually includes a grace period
The date on which you become covered under any other group health plan, provided the new plan contains no exclusions or limitations for coverage of pre-existing conditions
My focus of HIPPA is for a person who voluntarily leaves the workforce before being eligible for Medicare. If you are healthy, most likely you would be able to obtain health insurance with any provider. However, if you have a chronic illness, most providers would be reluctant to sign you into their plan.
HIPPA is the gateway to health insurance coverage after your COBRA coverage terminates. Careful planning is quite important to make sure that you will be eligible under the HIPPA guidelines:
Have at least 18 months of prior coverage (including COBRA) without a break in coverage of more that 62 days. The most recent coverage must be under a group health plan.
Not be currently eligible for coverage under a group health plan, Medicare, or Medicaid
Not have any other insurance (including conversion coverage)
Most recent coverage not terminated because of nonpayment of premiums or fraud
Elected and exhausted COBRA continuation coverage
An important item to consider is that while you will have insurance coverage, this coverage quite likely will not be what you had with COBRA. The preimium most likely will be higher, the deductible will be higher, and prescription drugs may or may not be covered.