Health plan participants covered by an employer-sponsored health insurance plan can possibly lose coverage if the employer discontinues the plan, the employee quits or the employee gets divorced from a covered spouse. If you lose your health insurance for any of these reasons, you have other options to continue coverage or to obtain new coverage from a different source.
Continuation of Coverage
Plan participants who lose an employer health plan because of voluntary or involuntary job loss, reduction of hours, divorce or other reasons may have the option to continue coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA). Qualified individuals can continue group plan benefits for a period of 18 months. A covered spouse who lost benefits because of a divorce may continue benefits for a maximum of 36 months. However, employees and/or family members who continue health insurance through COBRA are responsible for paying the premiums associated with coverage, which could be more expensive than group plan rates. The Department of Labor reports that individuals may be required to pay the entire premium for coverage up to 102 percent of the cost of the plan.
If you lose your health insurance, consider purchasing an individual policy from a private insurer. Individual health plans offer many types of benefits such as prescription drug coverage, hospital and emergency care, doctor’s visits, surgery and more. The two major drawbacks to individual insurance, however, are cost and eligibility. Private insurers are allowed to consider factors such as age, gender and health status in the underwriting process. If you have a chronic health condition, you may have to pay a higher premium, or you may be denied coverage entirely.
Some individuals and families who lose their health insurance and are unable to obtain private insurance because of health status may be eligible for the federal Pre-Existing Condition Insurance Plan (PCIP). This plan is offered through state health departments in conjunction with the U.S. Department of Health and Human Services. The health plan is designed to make health insurance affordable for people who have conditions such as cancer, diabetes, asthma and other chronic illnesses. Individuals must qualify for coverage, but their condition will not be excluded from the PCIP policy.
Individuals who lose their health insurance may be eligible for Medicaid if they meet certain income requirements. Medicaid is a state-sponsored health insurance plan for low-income individuals. Medicaid provides comprehensive health coverage at no cost to the individual and family members. To be eligible, recipients must display need and have very low assets. This means the recipient’s income cannot exceed a certain percentage of the federal poverty line and the recipient cannot have assets that exceed a specific dollar amount. Each state runs its own Medicaid program and eligibility is state-specific.
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