End of Employment, End of Health Insurance?

When employment ends, for one reason or another, so might your health insurance. There are always options to ensure that you do not have a gap in coverage and thus, you will not have a waiting period for preexisting conditions, provided you “play by the rules”.

If you are not yet eligible for Medicare, you can continue your health insurance under either the NJ Continuation Law or under the COBRA law. NJ Continuation applies if you work for a company with less than 20 employees; COBRA applies if you work for a company with 20 or more employees. Your employer must ALWAYS notify you, in writing, of your right to continue your benefits. That cover letter will usually (but not necessarily) tell you the length of period for which you can stay on the “company plan”. For example, NJ Continuation is only good for twelve months; COBRA can continue for 18 months or longer, depending on the circumstances.

If you elect NJ Continuation or COBRA, IT IS YOUR RESPONSIBILITY to know when that coverage will end! You should always receive a Benefits Booklet when you go on a group health insurance plan and in that booklet you should find a page or two telling you about NJ Continuation or COBRA. For NJ Continuation it will be clearly stated that you can continue for twelve months; for COBRA it will explain the various lengths of time you can stay on the plan, based on the qualifying event. SAVE THIS BOOKLET!!

If you continue your benefits, be sure to mark your calendar at least 6 to 8 weeks before your coverage ends to give yourself time to shop for a replacement plan. Last month a woman called our office looking for individual health insurance. She had quit her job in mid December, 2002 and received a letter from her employer telling her they terminated her from the company plan effective her last day of work but that they would be sending her instructions about continuing her benefits under NJ Continuation. She received a phone call telling her how much she had to pay and to be sure to send a check each month. Unbeknownst to her, her coverage ended one year later on December 31, 2003. She paid the premium for January and February, 2004 and had claims denied stating the coverage had terminated. When she called her former employer, she was told they would refund the premium for January and February, which they promptly did. The sad part of this story is that more than 63 days had elapsed before she found out she did not have health insurance. If you go from a group plan to an individual plan, you can have a gap of up to 63 days without coverage and still not have a waiting period for preexisting conditions. This person has diabetes, high blood pressure and emphysema. She cannot afford to be without health insurance but that is exactly where she is now.

The letter she received from her employer never mentioned the length of time that she could be on the Plan after her employment ceased. According to the NJ Department of Insurance, your benefits booklet is considered official notification. Had she been aware of this, she would have continuous health insurance today.

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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