What are the options an individual faces when losing health insurance through work?
One of the most common questions that we are asked is: What are the options an individual faces when losing health insurance through work?
The majority of Americans are depending on health insurance benefits that provided through their job. An article on healthaffairs.org, in 2017 56% of the population used health insurance services through their employer. Even though, for the most part, work health insurance is cheaper and rich with coverage, a lot of time I get the question: “what happen when I lose it?”
As an American citizen or permanent resident, there are a few option that one could choose from:
- Sign up for Cobra coverage that is been offered from the last employer
- Affordable Care act plan
- Purchasing a private plan – usually called short term plan or major medical plan.
As an experienced agent with Senior Benefits of Georgia, I will address each options with its advantages and disadvantages and the rules of enrollment.
Cobra, or the Consolidated Omnibus Budget Reconciliation Act
Cobra, or the Consolidated Omnibus Budget Reconciliation Act, was establish in 1986. It allows employees, and their dependents, the ability to continue the same health coverage if they lose it because of loss of employment or reduction in the amount of hours worked. The employee will need to pay for the full premium without the help of the employer, which most of the time makes the premium more expensive than other options in the market.
The employee will be able to use the plan up to 18 months, for the most part. There are a few that allow to stay for a maximum of 36 month. The employer have to give the employee up 60 days to decide if they want to sign into it or not. No pre-existent condition can eliminate the eligibility for Cobra plans.
The Affordable Care Act
The Affordable Care Act (ACA), was enacted on 2010. It provide, among other things, an affordable individual health plans. The open enrollment period for ACA plans is between Oct 1st and Dec 15th every year (GA State). There are a few cases that will entitle an individual a Special Enrollment Period status, and losing employer coverage is one of them.
An employee will have a 60 days open enrollment to sign into an ACA plan from the day his/she lost their employer health coverage. Employees that miss that window will need to wait until next open enrollment. Prices are attractive for families that earn between 100% and 400% of Federal Poverty Level (GA State) because those individuals will get a tax credit to help pay the premiums. Poverty level will determine the amount of co pays and deductible/max out of pocket for the year as well. There are no pre-existent condition limitations of getting ACA plans.
Employees should check the plans that they are signing into beforehand. In GA State, all the plans are HMO and only doctors in the network will be covered. Drug coverage is also different in every company or plan, so people who take drugs should make sure that the drugs they are taking will be covered appropriately.
Private plans include short term plans, or Major medical plans
Those plans has the least regulations, so people can sign into them any time of the year. These plans work as follow: they have a deductible amount, which paid fully by the insured. When it is paid, one will have a co-insurance period, where the insured will pay a portion of the service’s cost (example 80% insurance company 20% insured). After a max out of pocket is been reached, the insurance company pays for all the health services needed.
The insurance company will check every applicant, and most of the pre-existing conditions will prevent a person of getting a short term plan.
Losing Health Insurance At Work?
As shown above, there are a few options for people who lose their insurance coverage through their job. We help a lot of people understand their options and analyze which one will work. Feel free to contact us with more questions.