Health Insurance

Guaranteed-Issue Plans Including COBRA & HIPAA

This section addresses guaranteed-issue plans available in Florida. It should be noted that certain states (Massachusetts, Maine, New Jersey, New York, Vermont and Washington) have further requirements for insurance companies to provide guaranteed-issue coverage.

COBRA

The Federal Consolidated Omnibus Budget Reconciliation Act (COBRA) allows retiring employees, or those who lose coverage due to quitting a job or reduced work hours, to continue group coverage for a limited period of time. This also applies to their dependents who lose coverage because of divorce or legal separation; death of the covered employee; the covered employee qualifying for Medicare; or a loss of dependent status under the health plan's provisions. COBRA applies only to employers with 20 or more employees. If you qualify for COBRA benefits, your health plan administrator must give you a notice stating your right to choose to continue benefits provided by the plan. You then have 60 days to accept coverage or lose all rights to the benefits. Once you select COBRA coverage, you may have to pay 100 percent of the total insurance cost, plus a 2 percent processing fee.

Mini-COBRA

Florida's mini-COBRA law provides similar continuation of coverage protection for employees who work for employers with fewer than 20 employees. Under Florida's mini-COBRA law, the employee must notify the insurer within 63 days of losing group eligibility that he or she is eligible to continue coverage.

Check with your state insurance department to see if similar mini-COBRA laws apply in your state.

Qualifying For COBRA and Mini-COBRA

Continuation of coverage runs from a minimum of 18 months to a maximum of 36 months, depending upon the individual situation. The coverage may continue for an additional 11 months for an insured's disability that occurs during a qualifying event such as termination (except for gross misconduct) or a reduction in work hours for the employee; however, it cannot exceed the limit of 36 months. Other qualifying events may include:

• A beneficiary loses coverage due to the employee's death;
• A divorce or legal separation of the employee and a spouse;
• The employee's qualification for Medicare; and
• A dependent child's loss of status under the health plan's provisions.

In addition, Florida law gives you the option of converting your policy to an individual plan if you leave the group. If you terminate employment, get divorced or reach age 25 and no longer qualify under a parent's group plan, you may convert your group policy to an individual policy. A conversion policy usually costs more than a group policy. It may provide fewer benefits, but you don't need to medically qualify for coverage.

Health Insurance Portability and Accountability Act (HIPAA)

Federal provisions (referred to as the Health Insurance Portability and Accountability Act) govern many important health insurance continuation situations. Whenever you have a question concerning your health care coverage circumstances when your coverage is terminated, you lose health care benefits when your employment or COBRA ends, or your coverage changes because of a change in carriers or a change in your job, you may find yourself in a situation where HIPAA protections apply.

Portability

One of the most important HIPAA protections involves credit for prior coverage, often referred to as portability. HIPAA requires that time spent under previous coverage reduces any waiting period for a pre-existing condition under a new group plan you join. The law also limits these waiting periods to 12 months for a new employee joining the plan or 18 months if an employee decides to join the plan at a later date. (However, a pregnant woman who changes jobs and joins a new plan with two to 50 employees does not have to fulfill a waiting period before the health plan must pay for health care services associated with the pregnancy.)

Your insurance company will issue a "certificate of previous coverage," which is your proof of prior coverage and is required to be issued to you when your coverage terminates. This certificate will include a statement of how long you and any dependents were insured. It also explains to your new employer or company the range of benefits and coverage you had under that plan or policy.

You may have had health plan benefits for the most recent 12 months from either a group plan or an individual insurance policy. In either case, your previous coverage will generally reduce any waiting period for a pre-existing condition if you apply for a new group plan within 63 days. The waiting period a new employee experiences before they are eligible for benefits is not included in the calculation of the 63 days.

"Guaranteed-Issue" Individual Health Insurance Policies

Normally, people seeking individual medical coverage submit to medical underwriting to determine if they are sufficiently healthy to qualify for coverage. However, under certain circumstances, individuals may qualify for guaranteed-issue health policies by virtue of HIPAA and state law, meaning that the coverage must be issued regardless of the applicant's health status.

Who Qualifies For A "Guaranteed-Issue" Policy?

There are important requirements that determine whether you qualify for a guaranteed-issue, individual health insurance policy:

• You previously held membership under an employer group health, governmental or church plan, and no longer qualify for that plan or any other group plan;
• You exhausted any available COBRA or similar continuation of coverage periods;
• You have had 18 months of coverage with no "break in coverage" for a period greater than 63 days in which you lacked group or COBRA insurance; or
• You were issued individual medical coverage in Florida because your insurer withdrew from your area and you lost coverage, or you moved to another county in Florida where your current medical plan is no longer applicable.

What do I qualify for?

If your prior group coverage was an insured medical plan governed by Florida law, you qualify for a choice of plans that "convert" you to individual coverage, called a "conversion" plan. If your prior group coverage was through a self-insured group plan, or from an employer group insurance plan governed by the laws of another state, or you lost your individual coverage as mentioned above, then you are entitled to apply to receive a guaranteed-issue individual plan from any carrier marketing to individuals in the state. Such a carrier must offer you the two most popular products it is currently offering. An exception applies when the administrator of a self-insured group health plan offers a conversion option that complies with Florida law. In this case, you will not qualify for any other guaranteed-issue plan except for a choice between the conversion options above.

Check with your state insurance department for specific rules outside of Florida.

Guaranteed-issue individual policies include the following protections:

Credit for prior coverage

If you have 18 months of previous coverage without a break of 63 days or greater, you will not have a pre-existing condition waiting period for your individual policy to begin. Your previous coverage acts as a "credit" against the longest of such periods (24 months) that an insurer may require for a guaranteed-issue policy. Any previous coverage of your spouse or dependents also acts as a credit.

Coverage for a pre-existing condition

The policy may not completely exclude coverage for pre-existing conditions for you, your spouse or dependents by issuing a rider to the policy.

Coverage for a newborn or newly adopted child

If your child was born or adopted within the last 18 months, the child does not have to meet a "prior coverage" requirement. The child qualifies for benefits as soon as the policy begins.

Back to Top | Back to Health Insurance Home

• What is Traditional vs. Managed Care?
• Types of Major Medical Health Insurance
• What is a Health Savings Account (HSA)?
• Guaranteed-Issue Health Plans Including "COBRA" and "HIPAA"
• How Will I Be Impacted By 2010 Health Care Reform Legislation?