You've just been told your group plan is going away..... and there won't be any COBRA.

Why won't there by any COBRA?

COBRA is a part of the group plan; if the group plan ceases to exist, so does the COBRA. This would apply to someone already on COBRA as well as someone who would normally be eligible for it right now. Anyone currently on COBRA will lose their COBRA when the group plan goes away.

Do I have any other options?

Plenty – most of the time.

If you have a preexisting condition which would render you uninsurable by a regular carrier, you may apply for guaranteed coverage under a law called HIPAA (Health Insurance Portability and Accountability Act, 1996). This type of coverage is offered by most carriers who offer individual plans and is four to five times more expensive than regular rates would be, since this plan forces the insurance company to take someone they would normally decline, and to cover all conditions.

Some preexisting conditions are coverable by many insurance carriers: hypertension (controlled for at least six-12 months with the same medication), high cholesterol, situational or mild depression, etc. With HMOs, no. Regular carriers, such as American Republic, Aetna, Humana, HealthNet, Cigna, BCBS, United Security Life, John Alden, World, Continental General, Golden Rule, Celtic and several others will generally accept these conditions with either restrictive exclusion clauses or increased premiums. HMOs are health maintenance organizations and rarely allow for any preexisting conditions, for the most part, especially if there are medications involved.

Many conditions will render someone ineligible for coverage; there are simply some conditions that a carrier will not put an exclusion clause (or "rider") on, such as Type I diabetes, obesity, cancer in the last five years (other than basal cell), pregnancy, stroke, heart attack, angioplasty, by-pass, stint, elevated liver enzymes, hepatitis C, ulcerative colitis, fibromyalgia, CP, CF, MS, MD, severe asthma, congestive heart failure, rheumatoid arthritis, sleep apnea, a 'condition of unknown origin'... many conditions. There are a few exceptions... but only a few.

If you have preexisting conditions that could get you declined, you can often get a short term plan, which covers you for anything new in the way of illness or injury. There is no coverage for routine check-ups, physicals, maternity or mental health. If you are pregnant, you cannot get a short term or any other health plan plan, as a rule – if you are applying for portability (HIPAA), yes; if you can qualify for AHCCCS (low-income), yes; if you are going to another group plan which has enough members on it for maternity to be a required option of the coverage, yes. A medical discount program (not to be confused with a medical savings account), yes.

The first thing to do if you have lost group insurance is to check out the benefits on your spouses' group plan, if applicable. If that is not an option, and if you are in reasonable health, you can apply for coverage with any number of carriers, but it would be advisable to get a short term plan to fill in the gap between the group plan and the time it takes for a new plan to be underwritten (average four to six weeks). It is important not to have any gaps in your coverage, for one reason (other than the importance of being covered): if you go onto another group plan later, and have had a gap of more than 63 days in the prior 12 months (a gap being a period of time without coverage), you could end up with a one year exclusion clause on a preexisting condition.

All short term plans ask if you have been treated for, diagnosed with or taken medication for anything related to cancer, stroke, diabetes and / or heart in the last five years. If there is a "yes" answer, you cannot get short term coverage (with that carrier). But, again, if you have had 18 or more months of continuous coverage leading up to the day the group plan went away (even if the first six months was private insurance and only the last 12 months was group – so long as group insurance comprised the final portion of those 18 months) you can get guaranteed coverage. Some of the less expensive in the area of portability (HIPAA) plans are Golden Rule and Blue Cross Blue Shield for those under 50; over 50, Aetna is among the lower-priced.

If you have several preexisting conditions that would get you exclusions on a plan but not declined, and coverage for those conditions is important, you can apply for one of the new programs, a hybrid program of medical ppo discounts and cash indemnity coverage. These plans cost about $250-350 per month. Our agency carries these plans but I use them only when there are no other affordable options. They may or may not be considered creditable coverage and may or may not be HIPAA-compliant - depends on the company and the product.

In July of 2010, Arizona acquired a high risk pool. This was not voted in by the tax-payers but was mandated by the federal government.  The monthly premium starts at just over $500 and go to over $700 per person, depending on age. In order to qualify, you must be without any form of creditable coverage for a minimum of six months. High risk pools were designed to cover those who could not obtain coverage on any other type of health plan. Since they are synonymous with high risk, they usually carry a higher price tag.

Group insurance, on a per person basis, is generally more expensive than individual, since the risk is  greater to the carrier providing that coverage. When an employer with 20-25 employees hires someone who has been recently treated for heart attack, stroke or cancer, who is insulin dependent, has hepatitis C or any one of over 50 other conditions, the premiums will increase anywhere from 10% to 40% when the plan comes up for renewal (these renewal increases are passed on to those on COBRA, since COBRA is part of the group plan - therefor, the rates for the person on COBRA will go up proportionately, also). The greater the risks in the group, the greater the premium to the group. Some group rates have escalated to the point where employers have dropped their plans entirely. Group insurance often seems inexpensive to the employee, because most employers pick up 75% of the employees' portion of the premium, if not more. When someone goes on COBRA and sees the premium, they don't realize that this is a dollar for dollar match to what the employer was being charged for that employee's insurance.

Under the "health reform bill (ARIA) signed in February 2009, an employer must cover 65% of the first nine months of COBRA coverage for an employee who was involuntarily terminated. We still advise that if you can qualify for private individual coverage, do not take COBRA. As emphasized here and in preceeding articles, if something happens to your health while on COBRA, you may not have many affordbale options when COBRA goes away. A private individual plan is one you can keep until YOU decide you don't want it - it has no 'lifespan" like a COBRA plan. Also, if you are on COBRA and the group plan it comes from, goes away, the COBRA does, too.

So, yes, you have options, and those options depend, primarily, on your current state of health. If we can be of any assistance, feel free to call our office at 623-435-5511 (in Maricopa county) or 888-543-5637 (outside maricopa county).