Laws to Ensure Health
Coverage Come With Twists for Consumers
There are a couple of five-letter federal laws — COBRA and
HIPAA — that are meant
to help health-care consumers but sometimes seem to do a better job
of confusing them.
The laws often come into play when workers leave a job, switch a job
or make some other change, like going part-time, that impacts
their health benefits. Some readers have written to Out
of Pocket, wondering what these laws mean for them. This column
takes on a few of the issues.
COBRA lets many consumers continue to get the health coverage they had
through an employer at the employer's rate, generally for
up to 18 months after the employer coverage ends.
Getting that employer rate is supposed to be a benefit, but it may not
feel like much of one. If the employer provides comprehensive
insurance, it's not likely to be cheap. And COBRA consumers
usually pay the entire premium, plus in some cases an additional
2%, without the employer shouldering any of the cost, according
to the Department of Labor.
HIPAA is meant, among other things, to help ensure that consumers leaving
the corporate-benefits nest can get some form of insurance
when they're buying it on their own. The basic idea is to keep people
from being denied coverage based on their health history. States have
at least one or more insurers or programs required to accept so-called "HIPAA
eligible" customers.
You generally become HIPAA eligible when you've exhausted
every other option – for example, your COBRA runs out. Even
folks with a costly pre-existing medical conditions are entitled
to coverage if they're HIPAA eligible.
All of which brings us to today's question. Robin
Raff, of Walnut Creek, Calif., writes to the Out of Pocket
inbox: "I
am an independent contractor. After leaving my prior full-time
employment I went onto COBRA. I am paying $320/month. I am
quite healthy so I was wondering if it makes more sense for
me to go off of COBRA and take out a high deductible, low
premium health plan."
For Ms. Raff, ending COBRA coverage may make sense. But there's plenty
to consider before going that route. Here are some tips for
working COBRA and HIPAA to your advantage.
FIND OUT MORE
COBRA stands for the Consolidated Omnibus Budget Reconciliation
Act. HIPAA is the Health Insurance Portability and Accountability
Act. This Georgetown University Health Policy Institute web
site lets you search for information on insurance in your own state.
The Department of Labor also has consumer information,
answers to frequently asked questions and more
on HIPAA.
Don't end your COBRA coverage until you've secured your next
plan.
Ms. Raff says she has done some research and has found one insurance
plan that would cost her $185 a month – less than her COBRA
coverage. Presuming the coverage suits her needs, it might
be a better deal. But it's critical that Ms. Raff lock up
the new coverage before ending her COBRA coverage.
Here's why. First, the actual price of $185 might end up higher. When
consumers apply for their own coverage, insurers often require
them to provide detailed information about her health history. People
who consider themselves healthy may sometimes be surprised by what will
lead insurers to reject
them or increase
their premiums.
Next, if you leave COBRA early, you give up HIPAA protection down the
line – the guarantee of continued coverage post COBRA. That
means, if this new policy doesn't work out, in most states
you're on your own.
Say, for example, Ms. Raff were looking at a "short-term policy." These
are policies that last for a set period, normally less than
a year, that are often less expensive than COBRA. By going this route,
you may have "stepped
off the big ship into an iffy lifeboat," says Karen Pollitz, a Georgetown
University Health Policy Institute project director who studies
the individual insurance market.
As soon as you've ended your COBRA benefits
in favor of a plan in the individual market – short-term
or otherwise – you can't go back on COBRA, and you're no
longer guaranteed to get coverage under HIPAA. If you get
sick while you're covered by a short-term policy, it may
be difficult to get a long-term plan later on.
Not everybody needs to rely on HIPAA.
By Sara Rubenstein
The Wall Street Journal Online
February 23, 2005
|
