Losing Your Health Insurance

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Continuing your Health insurance after your employment has ceased is a major financial burden for many people. Exploring your options can be mind-boggling.

It is important not to have a gap in coverage so as soon as you learn when your coverage will cease you should purchase another plan. Do not wait until the day your coverage expires to decide that it is time to research this. You do have several choices. If you work for a company in New Jersey with less than 20 employees, you can continue your health insurance benefits under the New Jersey Continuation of Coverage provision. Employers with 19 or less employees have a legal obligation to notify their employees of their right to continue coverage at the time of termination of employment or at the time the employee assumes part time status and would lose health insurance benefits because of the reduction of hours. This means you can continue your group health insurance benefits for 12 months and you must pay the premium to your employer every month.

If you work for a company with 20 or more employees, you must be given the option to continue your benefits under the COBRA law. With COBRA, you can continue your benefits for 18 months. You are responsible for paying the premium each month. In most cases, continuing your benefits under New Jersey continuation or under the COBRA law is less expensive than purchasing health insurance on your own.

For those of you who have not shopped for health insurance, you are in for a big shock. A person purchasing single health insurance coverage will pay about $457 a month for a policy with a $1500 deductible. A hard core HMO (no freedom of choice) will cost about $332 a month with a $30 co-payment for each office visit. Families are also in for a big shock as the family premium is over $1000 a month with a $3000 aggregate deductible for the entire family. An HMO for a family with a $30 co-payment for each office visit is just under $1,000 per month.

This past week a person came to see me to purchase health insurance because she had lost her job in November and was covered under the group health insurance plan through December 31st. Her former employer called her on New Years’ Day to tell her he had just dropped her from the plan. He did not notify her of her right to continue her benefits under New Jersey Continuation of Coverage provision. That group health insurance will cost her about $160 per month, which is much better than trying to pay $457 when collecting unemployment. I gave her the necessary information to go back to her former employer and educate him/her about New Jersey Continuation of benefits provision. If an employer does not notify employees of their right to continue benefits, upon termination or reduction in hours, the employer can be held responsible for any medical expenses that are incurred. The State of New Jersey can also fine the employer heavily so it would behoove any employer to pay close attention to his/her responsibility when it comes to health insurance benefits.

For those of you who are retiring at age 65, you probably know that you are eligible for Medicare. Make sure you choose Part A and Part B Medicare. If you or your spouse is no longer working full time, you must take Part B Medicare. You may be able to continue group health insurance benefits from your former employer but those benefits will be secondary to Medicare. Many people that retire find that they will no longer have group health insurance and that it is necessary to purchase a Medicare supplement (also known as Medigap coverage). This coverage is a lot less expensive than purchasing the cost of health insurance when you are under age 65. The only time you can safely refuse Part B Medicare is when you or your spouse continues to work full time for a company with more than 20 employees. Then your group insurance is primary. But, upon loss of employment, you must apply for Part B Medicare so that it becomes effective when your employment ceases.

Irene Card & Betsy Chandler share the responsibilities of running Medical Insurance Claims, Inc. a health insurance services company . If you have questions relative to this column or other related topics, we invite you to call (973) 492-2828, or visit our contact page.