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You are here:Home Patient Information Disability IssuesLosing Your Current Healthcare Coverage
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Getting and keeping health insurance coverage through job and life changes can be challenging for people with IC. Having a chronic disease makes you a high risk for an insurance company, so when you don't have insurance through an employer, coverage can be difficult to qualify for or to afford. But going without health insurance carries a very high financial risk. All of the choices you might be able to make are hard ones, but you do have options. This article will lay those options out for you to help you decide what to do and point you to resources for more help and information. Most Americans who have health insurance have benefits through an employer, and most who lose coverage do so because of employment changes: getting laid off or fired, not being able to work enough hours to continue to qualify for your employer's benefits, or similar changes for the spouse who carried the coverage.
- Hang onto the employer's coverage as long as possible (COBRA)
- Qualify for Medicare if you get a Social Security disability determination
- Switch to your spouse's insurance (if possible) or find an employer that offers health benefits for part-time, contract, or temporary work if you can't work full time
- Buy into a group plan
- Buy an individual health insurance policy
- Buy insurance through your state's high-risk pool or during your state's "open enrollment" period
The health benefit provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA) are what make it possible for you to keep your employer's health benefits temporarily if you lose your coverage because of certain specific events. (This applies to employers who have 20 or more employees on at least 50 percent of their business days.) For you and your plan, those events are generally a reduction in your hours or voluntary or involuntary termination of employment for reasons other than gross misconduct. For your coverage under a spouse's plan, those events include termination and reduction in hours as well as your spouse becoming qualified for Medicare, death, or divorce or legal separation. You have 60 days from the time that your employer notifies your plan of the event (which usually occurs right away) to choose continuing coverage.
Usually, with COBRA continuation, your employer won't be contributing part of your premium, so you'll be paying much more for health insurance than you did as an employee. In fact, the employer may charge you 102 percent of the premium that they have to pay on your behalf. That amount may be a financial shock, but the insurance is still group insurance. And what you pay for group insurance will be lower than comparable coverage under an individual plan. In fact, it may be lower than even a bare-bones individual policy. In addition, you often won't qualify for policies with many insurers because you have a chronic condition—IC.
The continuation in coverage COBRA requires can extend to a maximum of 18 months, unless there is another "qualifying event." For example, if you elect continuation because you reduce your hours below what your employer requires for coverage and then you get laid off, the layoff is a second qualifying event. One other qualifying event is a very important one for IC patients, and that is a Social Security Administration (SSA) determination of disability.
IC can be debilitating enough to keep you from being able to work and can qualify you for an SSA determination of disability. Thanks to ICA advocacy, SSA made an official policy interpretation ruling for IC in November 2002. That is official SSA recognition that IC may qualify you for disability, and that ruling's guidance is binding on SSA adjudicators in processing IC disability claims. (You can obtain helpful information about applying for an SSA disability determination from the ICA.) If you get the disability determination, you automatically qualify for Medicare, but the coverage doesn't start until two years after your determination is made.
That's why, if you are leaving work because your IC keeps you from being able to be on the job or put in the hours, you need to apply for SSA disability right away! If you do, you can extend COBRA coverage for an additional 11 months beyond the 18-month maximum, but you must meet two requirements. First, you must get a ruling from SSA that you became disabled within 60 days of your COBRA continuation. That's not likely a problem if you have to leave work because of your IC. Second, you must notify your plan of that SSA disability determination within 60 days of getting it and before the 18 months of COBRA continuation are over. In total, COBRA may then extend for 29 months-and that leaves you very little wiggle room to get your SSA determination and COBRA continuation in order to prevent a gap before you get Medicare coverage. So, the message is don't delay!
With an extension of COBRA coverage, you may feel another financial shock because, with this kind of continuation, health plans can charge you 150 percent of the premium amount that they pay. Nevertheless, that may still be less expensive than individual coverage.
A number of bills proposed in Congress to eliminate the waiting period for Medicare coverage after a disability determination could lessen this financial shock for people who would have difficulty paying for their healthcare. But congressional committees have not yet acted on these bills.
Health insurance is so difficult to afford when it's not employer based that the situation has become TV sitcom fodder. Desperate Housewives' Susan Meyer remarried her ex-husband just to get the health insurance. But a step not quite so desperate as marrying for the health insurance is finding another full-time job with benefits that you can do despite your IC, if you are well enough that you don't meet SSA disability requirements. If you can't work full time, an option is to work part time for an employer that offers health benefits to part time, contract, or temporary employees.
Those types of benefits are rare. According to the Commonwealth Fund, in 2001 only 21 percent of "nonstandard" employees, that is part-timers, contract workers, or temporary employees, had employerbased health insurance. Today, with rising healthcare costs, that figure is likely lower.
But some businesses buck that trend. Some of the well-known national employers that provide healthcare and other benefits to their part-time employees are Starbucks, IKEA, Costco, and The Container Store. One way you can find employers that offer these benefits is to check "best companies to work for" lists that are national or local and then see if companies on those lists in your area offer healthcare benefits for nonstandard workers. Fortune's annual list is probably the best known. Other organizations and publications also have lists, such as Working Mother, the AARP, Forbes, the Great Place to Work Institute, and CAREERS & the disABLED magazine.
If you are a contractor, that is, a freelance worker, you may be able to purchase a group plan on your own in some states. In others, you must have employees to do so. But if you are a lone wolf, you may be able to purchase a group plan through an association that you join, such as a local small-business association or professional association. For association-type plans, you don't necessarily have to be employed, but you do have to meet the association's criteria for membership to qualify for the plan. Be sure to ask, however, whether the insurance is a group plan so that Health Insurance Portability and Accountability Act (HIPAA) rules for group plans will apply. Some associations offer health insurance plans through the organization, but the plan available to you may be an individual one.
The market for these types of group plans may change drastically in the near future, however. Bills in Congress would ostensibly make these types of plans more available to small business, but some would do so by negating nearly all state-enacted consumer protections for people buying insurance individually or through their employers. One of these bills went to the Senate floor for a vote but got tabled, and it's unclear what action might be taken on it now.
An advantage of being in a group plan is not just the generally lower cost. Plans such as these can help you avoid restrictions for pre-existing conditions, such as IC. That's thanks to HIPAA. For example, if you have had "creditable" health insurance for 12 straight months and no lapse in coverage of 63 days or more, the group plan you join must cover your care for your pre-existing condition right away. "Creditable" includes other group or government employee health plans, Medicare or Medicaid, and state high-risk pools. (See "High-Risk Pools" later in this article.) HIPAA's rules apply to every employer group health plan with at least two participants who are current employees, including plans for companies that are self insured. Some states apply the rule to "groups" of one, a boon for the self employed.
It can be extremely difficult to buy an individual insurance plan when you have a chronic disease, and if you can find one that will accept you, the premiums will likely be very high. That's because individual plans don't have to play by HIPAA rules, so they can deny you coverage because of your chronic disease, exclude coverage of your IC as a pre-existing condition, or ask you to pay an extremely high premium.
Individual plans are not out of the question, however, but when you look for one, it can be a wise move to use an insurance broker instead of applying yourself, for example, through internet insurance sites. Your IC, like any chronic illness, can be a reason for many companies to deny you coverage. And once you have been turned down for insurance by one company, other companies are very likely to turn you down, too. In fact, a question about whether you have been turned down for insurance is part of nearly every insurance application. An insurance broker can help you avoid that. He or she will usually know which companies will accept patients with a pre-existing condition if it is well managed. A broker may also know which companies give the best service, for example, those that don't hassle you on every claim or raise premiums frequently.
Numerous types of individual plans are available, but evaluate them carefully. Short-term coverage, which can be a lower-cost option, may be a possibility if you are between jobs. HMO and PPO plans are generally less expensive than traditional insurance, but for all of those, you may have to choose a high-deductible plan to make the premium affordable. More companies such as Sam's Club and Costco (in California) are jumping into the individual insurance market because so many people don't have coverage through employers or are between jobs, but those plans may also have the same limitations for pre-existing conditions and limitations on coverage.
Another option is a high-deductible plan with a health savings account, but you need to be sure you can front the deductible if you need care before you have enough in the account to pay it. Be aware that these types of plans are also subject to the same restrictions as other individual plans, such as for pre-existing conditions, and lifetime maximum payments may be lower than with other plans. Medical discount programs are also available, but beware. These are not traditional insurance and do not pay for any care. Instead, you pay somewhat reduced fees to certain providers who have agreed to take them. The Federal Trade Commission has warned consumers that, although some plans provide legitimate discounts, many offer very little for your money, and some claim they provide big discounts from numerous providers for doctor visits, hospital stays, and drugs but then don't make good on the claims.
Whether you purchase an individual or a group plan, be sure to check out the policy, the insurance company, and the broker very carefully. You need to go over any insurance policy with a fine-toothed comb for such hurdles as pre-existing condition restrictions, deductibles, copayment levels, and lifetime maximum payments, and you need to check that the broker is licensed and reputable. If you are able to get a group plan, keep in mind that even group plans are not automatically comprehensive enough to protect you financially. You need to examine a group plan as carefully as you would an individual plan.
In a report on health insurance in May, the PBS program NOW gave an example of a Florida couple who bought a group policy through the National Association for the Self-Employed. The couple thought the policy was comprehensive enough for their needs but, when the husband developed cancer, found it paid only a fraction of the cost. For example, the agent told them that the chemotherapy coverage they bought should be "more than they would ever need," but the $1,000 per day coverage was a pittance compared with the $14,000 a day cost. The show also profiled a Virginia couple whose policy covered only $15,000 of the $40,000 bill for breast cancer treatment, so they closed the husband's business and started all over again-in New York, which has strict rules regarding insurers.
For now, state rules govern health insurance policies and states license brokers, so you should check with your state health insurance department on their requirements. State insurance departments often have information to guide you on buying insurance and have consumer alerts about companies and brokers. They can tell you whether the broker you're considering is licensed in your state. The National Association of Insurance Commissioners has listings of all state insurance departments as well as a web page you can use to see if any consumer complaints have been lodged against an insurance company. You can also check out potential brokers with the National Association of Health Underwriters, which requires its members to adhere to a standard of ethics. Also, the National Committee for Quality Assurance has quality ratings of insurance companies. (See "Health Insurance Information Resources.")
If you can't get into a good group plan and you don't qualify for most individual insurance because of illness, a state high-risk pool is an option to keep you covered. Thirty-three states have them, with their requirements and affordability varying widely. Generally, they are more affordable for someone with a chronic illness than policies on the individual market.
By law, the premiums do have caps. Those range from a low of 125 percent of the average comparable premium for your state (California, Minnesota, and Oregon) up to 200 percent or more, although most states' average cap is 150 percent, according to the National Association of State Health Insurance Plans. These are examples of monthly premiums in states with at least 10,000 enrollees in the pools for a 50-year-old woman with a $500 deductible policy: $448 in Minnesota, $506 in Oregon, $865 in Illinois. In some states, premiums reach heights that exclude many from the pool. For example, in January 2005, the Seattle Times reported premiums reaching as high as $1,356 a month for individual coverage. As a result, in 2004, only one in seven people in Washington state who were denied health insurance because of illness participated in the state's high-risk pool. Some states offer much higher annual deductibles to lower the premiums. A few states (Colorado, Connecticut, Montana, New Mexico, Oregon, Washington, and Wisconsin) offer subsidies to help lowincome people with their premiums.
Most of these insurances, too, have waiting periods for coverage, similar to private insurance, unless you have been in a group plan and HIPAA rules apply.
Many states that do not have high-risk pools have guaranteed issuance policies. Some require all individual insurers to accept enrollees or HIPAA eligible enrollees. Some require certain insurers, such as Blue Cross, or certain types of insurers, such as large insurers, nonprofits, or HMOs, to accept enrollees either at any time or during an "open enrollment" period. Those insurance companies can also charge higher premiums for sicker patients, depending on the state. Some states, however, put caps on premium prices, some states prohibit price variation based on health status altogether, and some limit how much insurers can vary prices based on health status.
If you lose your unrestricted coverage, none of these choices available today is easy. Although a policy you can get may be very high cost, carrying no policy at all or having insufficient insurance coverage can mean financial ruin. In fact, about half of personal bankruptcies in 2000 were filed because of inability to pay medical bills and other problems arising from serious illness or injury, according to a Harvard study. About three-quarters of those people actually had health insurance.
Because the problem of the uninsured and underinsured hasn't been addressed nationally, many states are taking initiative to address the problem. Three states have taken steps to fill in the gaps in public and private health insurance systems, and one has required large employers to pay benefits. In 2003, Maine passed a health plan that offers insurance to small employers and to individuals, with subsidies for those with low incomes. Last April, a law passed in Massachusetts requiring everyone to buy health insurance by 2007, although it has to be affordable before you would be required to buy. The state will offer an "insurance connector" to help people who aren't being offered an employer-based plan find lower-cost insurance, and the state will offer subsidies to those with low incomes.
Employers who don't offer insurance would be required to pay an annual fee of $295 per employee. Illinois expanded a program that allows families of all income levels to buy into a health insurance program for children. And one state, Maryland, passed a law that requires very large employers-currently only Wal-Mart-to pay eight percent of payroll for health benefits or pay into a special fund.
So far in 2006, seven more states are considering universal health care plans: California, Connecticut, Florida (for children), Hawaii, Missouri, New Hampshire, and New York. In addition, seven states have commissioned studies to look at the possibility of a universal plan: Hawaii, Maryland, Minnesota, New York, Rhode Island, West Virginia, and Virginia.
Momentum is building for change in the healthcare system. In March, a Gallup poll showed that most Americans-Republicans, Democrats, and Independents, alike-are worried a great deal about the availability and affordability of healthcare. Last June, a Kaiser Family Foundation survey showed that Americans' top healthcare worry was "having to pay more for your health care or health insurance" (45 percent said they were very worried). Thirty-four percent were worried about not being able to afford the healthcare they think they would need, 30 percent about losing health insurance, and 18 percent about not being able to change jobs because they were afraid of losing health insurance. An ABC / Washington Post poll showed that Americans would prefer a universal health insurance program over the current employer-based system by a 2-to-1 margin (62 versus 32 percent).
But until the federal government or your state addresses these problems, be sure to consider your options carefully. You will need to weigh the risks of going without health insurance or with insurance that may not cover what you need against the potential costs. And when you do look for insurance, read the fine print! In other words, look very carefully at what the policy covers and whether it covers enough.
General information and assistance
Families USA
The program locator web page has a chart that shows which states have programs that help you find out what your options are or help different types of healthcare consumerssuch as those with private insurance, managed care, Medicaid, or the uninsured-with disputes. The state law web page has a chart showing which states have programs to assist consumers with private and public programs. http://www.familiesusa.org/resources/program-locator/
State_lawsa966.pdf
The Kaiser Family Foundation
This site has resources on health insurance, Medicaid, Medicare, and more.
http://www.kff.org/
The foundation's state-by-state guides on insurance, high risk pools, and guaranteed issue are here:
www.statehealthfacts.org/cgi-bin/healthfacts.cgi
Choose Managed Care and Health Insurance on the navigation bar at the right.
To learn more about COBRA continuation of health coverage, go to the Department of Labor's website:
www.dol.gov/dol/topic/health-plans/cobra.htm
Information on HIPAA is also available on the Department of Labor's website:
www.dol.gov/dol/topic/health-plans/portability.htm
Find your state insurance department:
National Association of Insurance Commissioners
www.naic.org/state_web_map.htm
Check out insurance companies with:
National Association of Insurance Commissioners
www.naic.org/
or
National Committee for Quality Assurance
www.ncqa.org/
(See the "Report Card" link on the right)
Check out insurance brokers through:
National Association of Health Underwriters
www.nahu.org/
Check information on state high-risk pools at:
National Association of State Health Insurance Plans
www.naschip.org/
Get specifics on state healthcare proposals at:
National Conference of State Legislatures
http://www.ncsl.org/programs/health/universalhealth2007.htm
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