DON’T WAIT TO REPLACE HEALTH INSURANCE COVERAGE!

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If you open the refrigerator and notice you are running low on milk, you may make a mental note to yourself to pick some up on the way home from work. Or you may figure if you run out you can always run next door and borrow some from a neighbor--or even go without it for a few days. While this may work with milk, it is not the same with health insurance. If your insurance is ending soon, you cannot wait until after it ends to find a new policy! Best case scenario is start your investigation about six weeks prior to the old plan ending, and be prepared to fill out an application for a new policy approximately a month prior to when you need it to be effective.

We received a call from a woman this past week who is assisting her parents who are in their 80’s. She told us that “Mom and Dad” were enrolled with an HMO that pulled out of the State of New Jersey as of the end of December 2001 - and Mom and Dad now had just Medicare. Her parents were certainly in need of a good Medicare supplement. If they applied for a Medicare supplement within 63 days of when their HMO left the State, they would have what is called a “creditable coverage” scenario - and then would not have to answer medical questions, or would not have a waiting period for pre-existing conditions (or possibly be denied coverage). If they waited past the 63 days, they would have to answer medical questions, and some companies would deny them coverage outright due to their present medical conditions, while others would place a waiting period on the pre-existing conditions. If you, or your parents, receive a letter from your insurer telling you that your coverage will end on a certain date, do not wait! Start making phone calls that day to get a new game plan going!

Another individual called us recently having come to the end of his COBRA benefits. He was upset first that the insurance company did not notify him that his benefits would end soon. COBRA is a law that allows you to continue your benefits when they would have otherwise ended due to termination of employment, death of the insured, divorce, or “aging out “ for 19-23 year olds. While COBRA does give you the right to continue your benefits for a specific period of time, it also requires that you accept responsibility for yourself. YOU are responsible to make sure that you pay your premium each month. You are also held responsible for remembering when it will end and making other arrangements at that time. This gentleman was further dismayed to hear that if he signed an application on Monday, he would not have confirmation on Tuesday that a new plan was in effect. Insurance companies receive many, many applications each day. Most require a month lead time to get everything processed, get you into the system, and issue a policy and ID cards. Your agent may tell you that getting an effective date of the next day is possible, but do not expect to have the confirmation or ID cards on such short notice.

Health insurance laws at present state that if you go from one plan to another with NO gap in coverage, you will not have a waiting period for pre-existing conditions, so long as you can prove that you have been continuously insured for the last twelve months (in some cases only six months). Having continuous coverage also ensures that you will have insurance should some unforeseen medical problem suddenly appear. While we do not like to see anyone have a gap in coverage for that obvious reason, the more important part is the pre-existing condition element. You may think that you are perfectly healthy and have no problems, but believe me, everyone tells me they were fine until the day the doctor said, “I see something here I don’t like the looks of”, and suddenly they have a pre-existing condition.

In the first example of the parents in their 80’s - making a decision while they were still within the 63 days window of creditable coverage would have saved them quite a bit of money as well. Given the creditable coverage scenario, they could then choose the insurance company that offered the lowest premium at that time, whereas after the 63 days, they would be forced to go with whatever company would still accept them -- regardless of what the premium might be. Protect yourself. Make sure that you do not have a gap in coverage when one policy ends and give yourself the most freedom of choice possible!

Irene Card & Betsy Card 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.