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Illness or non-work related injury can be financially devastating, especially when considering the rising cost of health care over the past 20 years. Health insurance can help protect you from large out-of-pocket health care expenses that can accumulate during an acute or chronic illness. If you have a job, your employer may provide group comprehensive major medical coverage. You can also purchase individual comprehensive major medical coverage privately or through an insurance agent or broker who is licensed by the State of California to sell health insurance products.
The American Recovery and Reinvestment Act of 2009 (ARRA), as amended on March 2, 2010 by the Temporary Extension Act of 2010, provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must generally occur during the period that began September 1, 2008 and ends on March 31, 2010. (An involuntary termination of employment that occurs on or after March 2, 2010 but by March 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through March 31, 2010 is also a qualifying event for purposes of ARRA.) The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months. See Temporary Extension Act of 2010.
A Health Savings Account (HSA) is a tax-favored account set up exclusively to pay certain medical expenses of the account owner, spouse, and dependents. Health insurance coverage must be provided under a high-deductible health plan. Qualified contributions by the account owner are deductible from gross income and growth inside the account is not taxed. Distributions to pay for qualified medical expenses are received income tax-free. Funds not used during one year can be held over and used to pay qualified medical expenses in a later year even if no further contributions are permitted.
For more information in regards to the Health Savings Account, employers are encouraged to review the IRS Publication number 969. Listed below is a link that you can download the publication directly from the IRS http://www.irs.gov/pub/irs-pdf/p969.pdf
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is federal law that extends your current group health insurance when you experience a qualifying event such as termination of employment or reduction of hours to part-time status. The extension period is 18 months and some people with special qualifying events may be eligible for a longer extension. To be eligible for COBRA, your group policy must be in force with 20 or more employees covered on more than 50 percent of its typical business days in the previous calendar year.
Indemnity policies, PPOs, HMOs, and self-insured plans are all eligible for COBRA extension; however, federal government employee plans and church plans are exempt from COBRA. Individual health insurance is also exempt from COBRA extension, which may be another reason to pursue participation in group health plans, if possible.
Cal-COBRA is a California law that has similar provisions to federal COBRA. With Cal-COBRA the group policy must be in force with 2-19 employees covered on at least 50 percent of its working days during
the preceding calendar year, or,
the preceding calendar quarter, if the employer was not in business during any part of the preceding calendar year.
Eligibility for Cal-COBRA extends to indemnity policies, PPOs, and HMOs only. Self-insured plans are not eligible. Unlike COBRA, church plans are eligible under Cal-COBRA. It is important to note that both COBRA and Cal-COBRA do not apply to individual health insurance.
As of January 1, 2003, the extension period for Cal-COBRA has been changed from 18 months to 36 months. If you become eligible for Cal-COBRA after January 1, 2003, you will have the benefit of Cal-COBRA coverage for a full 36 months instead of the prior 18-month coverage extension. California Insurance Code (CIC) Section 10128.59 provides a similar extension under Cal-COBRA for those who have exhausted their 18 months on federal COBRA (or longer in special circumstances) for a total extension that cannot exceed 36 months. For the special Cal-COBRA extension to apply, you must have become eligible for COBRA after January 1, 2003, and the employer's master policy must be issued in California. If the group master policy is not issued in California, then the employer must employ 51% or more of its employees in California and have its principal place of business in California for their California employees to take advantage of Cal-COBRA.
COBRA is regulated by the DOL-EBSA, and Cal-COBRA is jointly regulated by the CDI and the DMHC depending upon what type of group coverage you have (indemnity or HMO). These agencies can provide further information on the time frames employers and insurance companies/health plans must follow to offer COBRA or Cal-COBRA extension coverage for eligible employees and their dependents. Also, information can be furnished on the actions and responsibilities required by employees to participate and elect continuation of benefits under COBRA or Cal-COBRA. When experiencing questions or problems with COBRA or Cal-COBRA, you can reach the appropriate state or federal agency by referencing the contact information available in the resources section below.
Important Points to Remember About COBRA and Cal-COBRA:
COBRA is federal law that extends your current group health coverage after a qualifying event. Individual policies do not qualify for COBRA.
COBRA law applies to group policies in force with 20 or more employees covered on more than 50 percent of its typical business days in the previous calendar year.
Indemnity policies, HMOs, PPOs, and self-insured plans are COBRA eligible. Federal government employee plans and church plans are COBRA exempt.
Cal-COBRA is California law that closely follows federal COBRA.
Cal-COBRA law applies to group policies in force with 2-19 employees covered. Like COBRA, individual policies do not qualify for Cal-COBRA.
Only indemnity policies, PPOs, HMOs, and church plans are Cal-COBRA eligible.
You can contact the DOL-EBSA for questions regarding COBRA law.
You can contact either the CDI (on indemnity policies) or the DMHC (on HMO/managed care plans) for questions regarding Cal-COBRA law.
COBRA; Continuing Your Coverage
If your health insurance coverage depends on your employment, as is the case with many people, you may be able to continue your coverage even after you leave your job. The end of employment no longer means the end of health insurance. The Consolidated Omnibus Budget Reconciliation Act of 1986, commonly known as COBRA, extends group health insurance coverage for people willing to pay for converage.
The Rules:
All employer funded health plans covering at least 20 employees - insured and self-insured, public sector and private sector - must offer employees and dependents the optionof continuing group health insurance coverage when eligibility expires. The covered employees may have to pay the premium, however
Employees who are fired or leave their jobs for any reason (except gross misconduct) are entitled to coninuing coverage for a period of up to 18 months. Their dependents are entitled to continue coverage for the same period of time.
Divorced or separated spouses of active employees, and their dependents, may be covered for a period of up to 36 months. Widowed spouses and dependents of covered workers must similarly be offered coverage for a period of up to 36 months.
Reitrees with employer-paid health insruance are considered covered employees; their spouses are entitled to continue coverage after a divorce or the retiree's death
Coverage must provide the same health plan benefits that are offered to active workers. Coverage need not,however, include life or disability insurance.
Coverage ends at the expiration of the designated period or when the individual secures health insurance through another employer (including a spouse's employer) or becomes entitled to Medicare benefits after the date of the COBRA election. It may also end if the employers discontinues group health insurance coverage for all employees or if the overed individual fails to pay premiums on time.
Employers may charge up to 102 percent of actual premium costs, with the extra 2 percent serving to defray administrative expenses or 150 percent of actual premium costs during a disability extension.
Other Choices
You may find the continuation coverage too expensive. If so, you do have other choices. One alternative would be to convert your group policy to an individual policy. You can usually do so without a medical exam and you will not have any gaps in coverage. On the down side, however, you'll find that such policies are usually far less comprehensive than the group coverage you're giving up.
Another alternative would be to take out an individual health insurance policy. Such policies may be expensive, but you should talk with your insurance agent about finding the right policy at the right price.
American Recovery and Reinvestment Act of 2009 (ARRA 2009)
The American Recovery and Reinvestment Act of 2009 (ARRA), as amended on December 19, 2009 by the Department of Defense Appropriations Act, 2010 (2010 DOD Act) provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must occur during the period that began September 1, 2008 and ends on February 28, 2010. The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.
How Is Health Insurance is Marketed in California?
Health insurance coverage is sold to consumers through individual policies or group policies.
Individual health insurance coverage should be pursued when your employer does not offer health insurance as a benefit of employment, when you cannot be named as the dependent on another person's insurance policy, or when you are not a member of a professional or trade association that offers group coverage. Many consumers are self-employed, contract employees, or work for small employers and do not have access to a group policy secured by an employer. Individual coverage can be obtained by contacting a licensed health insurance agent or broker. You will need to complete an application that includes your medical history, which will be reviewed by a medical underwriter at the health insurance company. If you meet the underwriting qualifications and are issued a policy, the company may not cover preexisting conditions up to one year after the effective date of the policy. However, if you have been previously insured under an individual or group policy without a break in coverage of more than 62 days, your new insurance company must apply the prior creditable coverage (refer to the "Health Insurance Terms" section below) towards any waiting period for preexisting conditions. Individual health insurance companies may reject your application based on your medical history.
Group health insurance offers certain advantages over individual health insurance policies. The waiting period for preexisting conditions is six months for policies covering 3 or more persons, not one year as with individual policies. Also, if you have been previously insured under a group policy without a break in coverage of more than 180 days, your new insurance company must apply the prior creditable coverage toward the six-month waiting period for preexisting conditions. Large employer group health insurance (more than 50 employees) and association group health insurance, like individual health insurance, is subject to medical underwriting. You can be denied coverage based on your medical history. Medical underwriting rules for small group health insurance (2-50 employees) differs from large group and individual health insurance policies. Regardless of any preexisting condition, you must be offered coverage under a small group policy on a guaranteed issue basis. However, the small group insurance company can utilize the six-month waiting period for preexisting conditions. Of course, if you have prior creditable coverage it must be applied to decrease or eliminate the waiting period.
Important Points to Remember About Individual and Group Health Insurance Coverage:
Health insurance coverage is sold to consumers under either individual or group policies.
Individual and large group policies are subject to medical underwriting.
Qualifying creditable coverage must be applied towards the year waiting period for preexisting conditions in individual policies and towards the six-month waiting period for preexisting conditions in group policies.
Small group policies require that coverage be offered on a guaranteed issue basis regardless of any preexisting condition.
Mar. 21: The health overhaul package passed by the House Sunday and sent to the Senate for final action is the most far-reaching health legislation since the creation of the Medicare and Medicaid programs.
While the underlying Senate bill will become law as soon as President Barack Obama signs it, additional changes will occur if the Senate passes the reconciliation-bill part of the package. The following is a look at the impact of the entire package, which would extend insurance coverage to 32 million additional Americans by 2019, but also have an effect on almost every citizen.
Here's where things stand and how you might be affected:
Q: I don't have health insurance. Would I have to get it, and what happens if I don't?
A: Under the legislation, most Americans would have to have insurance by 2014 or pay a penalty. The penalty would start at $95, or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. This is an individual limit; families have a limit of $2,085. Some people would be exempted from the insurance requirement, called an individual mandate, because of financial hardship or religious beliefs or if they are American Indians, for example.
Q: I want health insurance, but I can't afford it. What do I do?
A: Depending on your income, you might be eligible for Medicaid, the state-federal program for the poor and disabled, which would be expanded sharply beginning in 2014. Low-income adults, including those without children, would be eligible, as long as their incomes didn't exceed 133 percent of the federal poverty level, or $14,404 for individuals and $29,326 for a family of four, according to current poverty guidelines.
Last Updated on Tuesday, 23 March 2010 03:04
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Health plan sponsors need to be vigilant and take action in 2010 as medical plan costs are expected to rise at a faster rate than they have in recent years.
As many employers have already, unfortunately, discovered, health care costs continue to skyrocket. Experts analyzing a new survey project that costs for the most popular types of health care coverage will increase at double-digit rates for 2010.
