With the high cost of health care today, health insurance continuation is an important consideration for many unemployed individuals, job changers, dependents of covered workers, and retirees who no longer receive employer-provided benefits. Despite several laws in effect that make it possible to extend employer-provided health insurance, some workers continue to experience "job lock." This is a situation where workers, particularly those with pre-existing health conditions, feel that they must remain in a particular job for fear of losing their health insurance coverage.
Two federal laws that govern the continuation and portability of employer-provided health insurance benefits are the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) and the Health Insurance Portability and Accountability Act of 1996 (HIPAA). While each of these laws has its benefits, neither helps people initially get insurance on their own (e.g., young adults after parents' benefits and COBRA end), nor do they reduce the cost of health insurance premiums. Another related health insurance continuation law, passed in New Jersey (effective May 2006), allows unmarried adult children to remain as dependents on a parent's health insurance plan through age 30.
Below is a description of each law, including a description of who is and is not covered, time limits, advantages and disadvantages, required actions to retain coverage, and other important details:
Provides continued group health insurance, at premiums of up to 102% of cost, for up to 18 months (terminated workers) or 36 months (dependents of covered workers who lose coverage through life events such as widowhood or divorce). Coverage is voluntarily within specified time limits. Only about 20% of those eligible for COBRA benefits choose to remain on a former employer's health plan.
Who's Not Covered
Alternative Sources of Health Insurance When COBRA is Not Available
Required Action Steps
Provides workers and eligible family members with pre-existing conditions guaranteed immediate coverage under a new employer's health insurance plan if they were insured for at least 12 months with a former employer. The intent of HIPAA is to reduce "job lock" by lessening the risk of loss of health coverage associated with a change of employers. Eligible workers who change jobs aren't subject to a waiting period (often a year) for medical expenses associated with a pre-existing condition (e.g., a history of cancer) unless they have a lapse in insurance coverage of more than 63 days.
Who's Not Covered
Recommended Action Steps
Dubbed the "18 to 30 bill," this law that extends the "age of dependency" for family health insurance coverage was passed to address the problem of young adults "aging out" of their parent's health insurance before obtaining adequate coverage on their own. Many employer-provided policies drop children from coverage at specified ages, such as 19 or 23 (if attending college).
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