Comments on: COBRA Only Helps If You Can Afford It http://www.healthinsurancecolorado.net/blog1/2009/02/10/cobra-only-helps-if-you-can-afford-it/ Research and discussion of the Colorado health insurance industry and the healthcare crisis in America. Fri, 12 Mar 2010 20:34:06 +0000 http://wordpress.org/?v=abc hourly 1 By: Jay http://www.healthinsurancecolorado.net/blog1/2009/02/10/cobra-only-helps-if-you-can-afford-it/comment-page-1/#comment-13021 Jay Wed, 11 Feb 2009 23:17:30 +0000 http://www.healthinsurancecolorado.net/blog1/?p=992#comment-13021 Don, That is very common thinking. The proof of creditable coverage only applies when you're going to another guarantee issue plan, like through an employer or to a risk pool like Cover Colorado.* It is complicated though. (that is why I put an asterisk) *Say that a carriers underwriting standards were to give you a rate increase because of your pre-existing condition, instead of putting an exclusion on it or declining you. In that situation, they could still not cover your pre-existing condition (as the HIPAA guidelines state) without having put an exclusion on it if you didn't have continuous coverage. But in short, everybody gets underwritten for individual/family coverage the same. It doesn't matter if you've been uninsured your whole life, if you're applying for the same carrier you have a group policy with now, if you're coming from a risk pool... whatever. If you're healthy and they think you're a good risk, they'll take your premiums. If they think you're a bad risk, they can decline you, exclude your pre-existing conditions, or increase your rate. You're options then would be to get coverage from another employer (maybe even a group of one if you have your own business), or through the risk pool (Cover Colorado). But the guarantee issue options are more expensive because of the higher cost structure of guarantee issue plans and the more extensive coverage mandates on guarantee issue plans. Don,
That is very common thinking. The proof of creditable coverage only applies when you’re going to another guarantee issue plan, like through an employer or to a risk pool like Cover Colorado.*

It is complicated though. (that is why I put an asterisk)
*Say that a carriers underwriting standards were to give you a rate increase because of your pre-existing condition, instead of putting an exclusion on it or declining you. In that situation, they could still not cover your pre-existing condition (as the HIPAA guidelines state) without having put an exclusion on it if you didn’t have continuous coverage.

But in short, everybody gets underwritten for individual/family coverage the same. It doesn’t matter if you’ve been uninsured your whole life, if you’re applying for the same carrier you have a group policy with now, if you’re coming from a risk pool… whatever. If you’re healthy and they think you’re a good risk, they’ll take your premiums. If they think you’re a bad risk, they can decline you, exclude your pre-existing conditions, or increase your rate. You’re options then would be to get coverage from another employer (maybe even a group of one if you have your own business), or through the risk pool (Cover Colorado). But the guarantee issue options are more expensive because of the higher cost structure of guarantee issue plans and the more extensive coverage mandates on guarantee issue plans.

]]> By: Don Levit http://www.healthinsurancecolorado.net/blog1/2009/02/10/cobra-only-helps-if-you-can-afford-it/comment-page-1/#comment-13020 Don Levit Wed, 11 Feb 2009 22:43:44 +0000 http://www.healthinsurancecolorado.net/blog1/?p=992#comment-13020 Jay: I was being a bit sarcastic. To have to pay full group premiums for 18 months in order to have the opportunity of obtaining an individual policy without proving health is a huge price to pay. On the other hand, being able to take an individual policy with you by retiring from the employer could be a huge benefit, particularly if the plan is designed to be a win-win for both the former employee and the insurer over the long run, say, to Medicare eligibility. Of course, one need not actually retire, but simply leave the employer for a different employer. Don Levit Jay:
I was being a bit sarcastic.
To have to pay full group premiums for 18 months in order to have the opportunity of obtaining an individual policy without proving health is a huge price to pay.
On the other hand, being able to take an individual policy with you by retiring from the employer could be a huge benefit, particularly if the plan is designed to be a win-win for both the former employee and the insurer over the long run, say, to Medicare eligibility.
Of course, one need not actually retire, but simply leave the employer for a different employer.
Don Levit

]]> By: Jay http://www.healthinsurancecolorado.net/blog1/2009/02/10/cobra-only-helps-if-you-can-afford-it/comment-page-1/#comment-13019 Jay Wed, 11 Feb 2009 22:24:52 +0000 http://www.healthinsurancecolorado.net/blog1/?p=992#comment-13019 Don, Thanks for the good information about the options for retiring employees. In the first part though, what do you mean about the "benefit" of converting COBRA to an individual policy? Don,
Thanks for the good information about the options for retiring employees.

In the first part though, what do you mean about the “benefit” of converting COBRA to an individual policy?

]]> By: Don Levit http://www.healthinsurancecolorado.net/blog1/2009/02/10/cobra-only-helps-if-you-can-afford-it/comment-page-1/#comment-13018 Don Levit Wed, 11 Feb 2009 19:59:13 +0000 http://www.healthinsurancecolorado.net/blog1/?p=992#comment-13018 Louise: I am not surprised that 1 in 9 people accept COBRA. I wonder, of this amount, how many keep it for the maximum period? As you know, one of the "benefits" of doing so, is being able to convert it to an individual policy. Another alternative which is rarely mentioned is an alternative retiree health plan can be offered in lieu of COBRA. I envision this type of plan to be a very innovative policy, one in which a person could actually retire with, even if not immediately leaving his employer. Here is the excerpt from page 3 of an article written by the Congressional Research Service, which can be found at: http://assets.opencrs.com/rpts/R40142_20090116.pdf. "If the employer does offer a retiree health plan, but it is different from the coverage the employee had just before retirement, the employer must offer the option of COBRA in addition to the alternative retiree plan. If the retiring employee opts for the alternative coverage and declines COBRA, then he is no longer eligible for COBRA." Don Levit Louise:
I am not surprised that 1 in 9 people accept COBRA.
I wonder, of this amount, how many keep it for the maximum period?
As you know, one of the “benefits” of doing so, is being able to convert it to an individual policy.

Another alternative which is rarely mentioned is an alternative retiree health plan can be offered in lieu of COBRA.
I envision this type of plan to be a very innovative policy, one in which a person could actually retire with, even if not immediately leaving his employer.
Here is the excerpt from page 3 of an article written by the Congressional Research Service, which can be found at:
http://assets.opencrs.com/rpts/R40142_20090116.pdf.
“If the employer does offer a retiree health plan, but it is different from the coverage the employee had just before retirement, the employer must offer the option of COBRA in addition to the alternative retiree plan. If the retiring employee opts for the alternative coverage and declines COBRA, then he is no longer eligible for COBRA.”
Don Levit

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