California health insurance    Health plan basics in California    Guide to Continuation of Coverage

A Guide to Continuation of California Health Insurance Coverage

What exactly does Continuation of Coverage refer to when discussing California health insurance?  Since a person can generally continue an individual family health plan until they turn 65 (at which point Medicare takes over), continuation of coverage generally refers to options available to people who are leaving or losing their group health insurance in California.  Let's take a look at what's available and how this will likely change with Health Reform when it's fully enacted. 

Many people in California get their health insurance through employers via group health insurance.  Of course, in the U.S., people change employment quite a bit so how can we address potential lapses in health insurance that result from this.  That's where various laws come into play to provide continuation of coverage in the form of Cobra and HIPAA.  Let's look at how these programs work. 

When you leave group health insurance (other than for gross misconduct), you should have a Cobra or Cal-Cobra option depending on the size of the company and how it's structured.  Cobra, if available, allows you to continue on the same coverage you had through the group plan but pay the premium yourself.  The cost may be 10% higher than what the company was paying.  Your dependents can also have coverage through the Cobra option and the termination of employment may be a qualifying event which allows you to change plans (if available) and add/remove dependents to the plan.  Check with your HR department or carrier to find out what options are available.

If Cobra is available, you have 62 days to elect Cobra from your last date of group health insurance and you should receive a Cobra election letter that specifies your time table for responding back.  It's very important that you don't lapse this period of time as you will lose your Cobra option and Cobra tends to be very strict both about electing initial coverage and making monthly payments.  Once it is cancelled, it's nearly impossible to get back.  You can generally piece meal coverage for family members.  For example, if dependent children are healthy and can qualify for less expensive individual family health insurance but the dependent father (or even past employed mother) is unhealthy, it might make sense to get individual family insurance for the kids and elect Cobra for just the family members that can't qualify based on health.  Cobra poses many different options so it's best to discuss your situation with a license agent.  The net take away is that you do have a back up option in Cobra but make sure not to lapse the election period.  If you have haven't received any information regarding Cobra within 30 days of losing your prior group health insurance, make sure to contact your carrier or HR department. 

Cobra will generally last for up to 18 months but you may have a Cal-Cobra extension available for another 18 months.  Basically, your period of potential coverage is from 18 to 36 months providing that the underlying group health insurance does not disappear (company closes down or closes down the group health plan).  You can cancel your Cobra coverage month to month during this period and if you're in good health, it makes sense to consider individual family insurance which we discussed here.  Keep in mind that if the group changes plans or carriers, your Cobra coverage would also change with it.

If you exhaust Cobra (18 or 36 months), you may have HIPAA coverage in California as an option.  We've discussed HIPAA in more detail here but it's basically a guaranteed issue option for those that qualify.  Keep in mind that these two options are really only a concern until Jan 1st, 2014 when the Health Reform Exchanges go into effect.  Coverage will then be guaranteed issued (regardless of health) and will probably make Cobra or HIPAA options obsolete unless there's some advantage (cost or benefit) to remaining on the Cobra coverage.

 


                         

 

 



 

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