When your employer declares bankruptcy and other interesting questions

Q. My employer informed me that he is about to declare bankruptcy. What will happen to our group health insurance?

A. You will lose it. When the group (the employer’s business) ceases to exist so does the health insurance. Unfortunately, many employees don’t find out about this until it is too late, meaning there has been too long a gap with no coverage and there will be a waiting period for preexisting conditions. If you go from one small group (less than 50 employees) to another small group, you can have a gap of up to 90 days but if you must buy individual coverage, the gap without coverage cannot exceed 30 days. If you get a job with a very large company, their may or may not be a waiting period for preexisting conditions.

Q. What is the difference in cost between NJ Continuation premiums and COBRA premiums?

A. COBRA applies if you work for a company with 20 or more employees. The employer can only charge you his actual cost plus 2% for administrative services. NJ Continuation applies if you work for a company with less than 20 employees and again, the employer can only charge you the actual premium that he must pay plus the two percent. The cost of health insurance varies dramatically, depending on the coverage you have.

Q. What happens when COBRA runs out and I don’t purchase another insurance plan?

A. You have no health insurance and are exposing yourself (and possibly family) to huge medical expenses. If you wait more than 30 days for your new coverage to become effective, you will have a one-year waiting period for preexisting conditions.

Q. Do all states have similar Medicare plans?

A. Medicare is a federally funded program and it is the same throughout the United States. There are times when Medicare (Congress) will “test market” a particular medical service in a certain geographic area to help them determine if this is a service they should cover.

Q. Do all states have similar Medigap plans?

A. Yes. There are ten Medicare supplement (Medigap) policies from which to choose and they are identical in all of the states.

Q. What drugs does Medicare pay for?

A. At the moment, Medicare pays for chemotherapy drugs and some antibiotics that are injected intravenously (or through a pump) by your physician. Medicare does not pay for any oral medications (pills that you swallow). There is a Bill on the President’s desk awaiting his signature and that Bill will provide some limited prescription benefits starting in 2006. That will be the topic of another column.

Q. Does Medicare pay for medical expenses outside of the USA?

A. No. Medicare supplements C through J will pay for up to $50,000 LIFETIME in benefits after a $250 deductible. We always tell our clients who are traveling outside of the country that if they get sick they should get stabilized and get back to this country as quickly as possible. Of course, $50,000 for medical expenses goes a lot further in most other countries.

All of these questions were asked of me when I presented a program on health insurance issues to a diabetic support group.

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, browse our past columns on our web site at www.micinsurance.com.

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