Tips About Securing Health Insurance When You Are In-Between Jobs: Hitches and Glitches You

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Tips About Securing Health Insurance When You Are
In-Between Jobs Hitches and Glitches Youll
Want to KnowHR Women and FriendsGeneral
MeetingJanuary 21, 2009
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Outline of Topics

• Brief overview of key legislation affecting
  health benefits
• COBRA/Cal-COBRA
• Cal-COBRA Extension (AB 1401)
• HIPAA
• Certificate of Credible Coverage
• HIPP
• Insurance for Job Seekers (Health Care Options
  Available)
• Hitches and Glitches Discussion

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What is COBRA and Cal-COBRA?

• In California, there are two COBRA programs
  available depending on the employee population of
  the company for which you work (or worked)
• If your company has 20 or more employees, it
  falls under Federal COBRA regulations
• If you company has 2-19 employees, it falls under
  a state program called Cal-COBRA
• Federal COBRA is generally administrated for your
  employer by what is known as a "third-party
  administrator" or TPA. The TPA handles billing,
  premium payments and the administrative duties of
  managing those former employees and dependents
  who are on COBRA continuation coverage. If your
  employer does not use a TPA, then someone
  designated within the HR department usually
  handles all these tasks.
• Cal-COBRA is a state program modeled after the
  federal program and is administrated by the
  health insurance company directly. If you were
  covered by any of the employer sponsored health
  plans, you would make your payments directly to
  the carrier who will handle coverage, billing and
  the other administrative functions.

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What is the Cal-COBRA Extension?

• Cal-COBRA Coverage Extension (AB 1401) extended
  the COBRA and Cal-COBRA benefit for an additional
  18 months, to a maximum of 36 months total
• Until AB 1401 went into effect, you were able to
  elect COBRA or Cal-COBRA continuation coverage
  for yourself and family when you left your job.
  You were eligible for
• 18 months of coverage, or
• 29 months of coverage if you were disabled and on
  SSDI, or up to
• 36 months of coverage for divorce, death and
  other special qualifying events
• Those on Cal-COBRA may simply continue their
  coverage for an additional 18 months after they
  exhaust the first 18 months. Those on federal
  COBRA will first use the 18 or 29 months of
  federal COBRA then be shifted to Cal-COBRA for
  the additional 7 or 18 months
• Employees covered under a group health plan that
  does not do business in California and operates
  in a state other than California may not be
  eligible for AB 1401 continuation protections. In
  these cases, often the employer is domiciled in
  another state and that other state's rules would
  apply to that employer's California employees
• Employees of self-funded or self-insured programs
  are not eligible for the extension under AB 1401

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More on the COBRA/Cal-COBRA Extension

• Applies only to insured health plans, certain
  disability contracts that provide medical
  coverage and does not apply to health plans that
  are self-funded or self-insured
• Vision and Dental care plans are excluded only
  plans that offer medical and hospital benefits
  are subject to the extension
• Anyone starting COBRA/Cal-COBRA after January 1,
  2003 must use all 36 months of eligibility in
  order to qualify for HIPAA Guaranteed-Issue or
  Conversion coverage
• Previously it was 18 or 29 months depending on
  whether or not you were disabled
• If you fail to elect the additional 7 or 18
  months of Cal-COBRA, you lose all of your rights
  to purchase a guaranteed-issue individual
  contract
• For those with preexisting conditions and health
  issues, this extends the time that they could buy
  an individual guaranteed-issue policy
• Cost of continuation coverage under AB 1401
  increases to 110 of group rates (same as
  Cal-COBRA), or 150 of the group rate for
  extensions on account of disability
• Health care service plans and health insurers
  assume responsibility for administering coverage
  continuation when Cal-COBRA applies
• Look for notice from carrier/plan sponsor approx.
  90 days in advance of the end of COBRA period

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COBRA/Cal-COBRA Qualified Events, Beneficiary and
Duration
EVENT BENEFICIARY DURATION
Termination of employment or Reduction in hours of the Covered Employee Covered EmployeeSpouse (of Covered Employee)Dependent Children (of Covered Employee) 18 Months Cal-COBRA (AB1401) - extends to 36 Months
Termination of employment or Reduction in hours of the Covered Employee, with a Social Security disability determination Covered EmployeeSpouse (of Covered Employee)Dependent Children (of Covered Employee) 29 Months Cal-COBRA (AB1401) - extends to 36 Months
- Death of Covered Employee- Divorce or Legal Separation of the Covered Employee Spouse- Employee Entitlement to Medicare Spouse (of Covered Employee)Dependent Children (of Covered Employee) 36 Months
Loss of Dependent Status Dependent Children (of Covered Employee) 36 Months
Bankruptcy Proceeding of the Employer RetireeSurviving Spouse Lifetime
Bankruptcy Proceeding of the Employer Spouse of RetireeDependent Child Until the retiree dies, plus up to 36 months
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What is the Health Insurance Portability and
Accountability Act of 1996 (HIPAA)?

• Among other provisions, the Health Insurance
  Portability and Accountability Act of 1996
  (HIPAA), also known as the Kennedy-Kassebaum Act,
  Public Law 104-191, which amends the Internal
  Revenue Service Code of 1986
• HIPAA improves the portability of employee health
  coverage, so that health coverage is less likely
  to be significantly interrupted when someone
  changes jobs (portability)
• This is accomplished by
• placing limits on the length of any pre-existing
  condition exclusion period that a group health
  plan may apply
• requiring that group health plans consider an
  individuals previous creditable coverage to
  further limit any pre-existing condition
  exclusion period and
• requiring plans to provide for special
  enrollment opportunities when an employee (or an
  eligible spouse or dependent) loses other health
  coverage or when the eligible employee gains a
  dependent through marriage, birth or adoption.
• Plans Subject to HIPAA
• Most group health plans with two or more
  employees at the beginning of the plan year
• May include coverages for nominal benefits, such
  as EAP programs or flexible spending accounts
• In general, any plan subject to COBRA or
  Cal-COBRA is subject to HIPAA

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More about HIPAA

• Three main elements of HIPAA are
• Portability originated to protect workers from
  limited job mobility because of pre-existing
  condition limitations imposed by health plans,
  referred to as job lock
• Privacy protects an individuals private health
  information (PHI) HIPAA was amended to require
  small plans to comply by 4/14/2004, all other
  plans were required to comply 4/14/2003
• Data Security protects data storage and security
  of PHI and access
• Other key objectives of HIPAA are
• Develop and enforce standards for managing health
  information (PHI)
• Standardization of electronic patient health,
  administrative and financial data (EDI)
• Unique health identifiers for individuals,
  employers, health plans and health care providers
• Reduce healthcare fraud and abuse
• The U.S. Department of Health and Human Services
  has been given enforcement responsibility for
  HIPAA. HIPAA is federally regulated and
  violations of HIPAA standards carry very stiff
  fines and criminal penalties - including
  multi-year imprisonment.

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HIPAA Portability - Certificate Requirements

• At the time an individual ceases to be covered
  under the plan and does not elect COBRA
• At the time COBRA ends
• Upon request if the request is made within 24
  MONTHS of termination of coverage
• Must issue certificates free of charge
• Most insurance carriers automatically send these
  when they are advised of coverage terminations
  but its the Plan Sponsor that is ultimately
  accountable
• TIP KEEP A COPY OF THIS (OR THESE) CERTICIATES
  WITH YOUR MEDICAL FILES (coverage
  creditability)

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What is HIPP?

• Health Insurance Premium Payment (HIPP) Program
• California Department of Health Services will pay
  health insurance premiums for certain persons who
  are losing employment and have a high cost
  medical condition
• Qualifications depend on income, Medi-Cal status,
  medical condition

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Insurance For Job-Seekers

• Rich Hemmerling
• Consultant, Sedona Benefits

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What Are Your Options?

• COBRA
• Short-term Insurance
• Individual/Family Plan
• HIPAA
• PPO Conversion plans
• Government sponsored Plans
• Access for Infants Mothers (AIM)
• Health Family Program (HFP)
• Major Risk Medical Insurance Program (MRMIP)
• Small Group?

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Why Is COBRA So Expensive?

• Large employers offer only a few very rich plans
• Usually 1 HMO and 1 PPO
• Often a low co-pay (5 or 10) with low
  deductible
• High premiums
• Employer usually pays most if not all of Premium
  for employee and at least some for dependents
• May be blended rates
• Administration fee - 2 or 10
• Can make COBRA rates very high can be a shock

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Short-term Insurance

• More relaxed underwriting
• Less concern about potential chronic conditions
• Less concern about height/weight
• Daily or monthly for up to 6 months
• May be renewed once but re-underwritten
• What happens if havent found a job when
  insurance runs out?
• Best to use if have a job but you are in waiting
  period

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Individual/Family Plans (IFP)

• Lowest Rates
• Fully Underwritten
• Can be rated or declined
• Tiers 1 thru 5 range from 25 to 212.5
• Kaiser is the pickiest no tiers
• Coverage is month to month no contract
• Can be kept for as long as desired
• Some carriers allow portability
• This is best alternative if you can qualify
• Dont wait, apply before COBRA window closes

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IFP Considerations

• Maternity Coverage is optional
• If You Have Pre-existing Conditions
• Waived With 6 Months Previous Creditable Coverage
  within 63 days
• Otherwise, choose an HMO plan

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What can you do if you are declined?

• COBRA
• HIPAA Coverage
• PPO Conversion plan
• Government sponsored Plans
• Access for Infants Mothers
• Health Family Program (HFP)
• Major Risk Medical Insurance Program (MRMIP)
• Find a Way To Qualify as a Small Group

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HIPAA Coverage

• Standard IFP plans but limited selection
• Requires at least 18 months of continuous
  coverage most recently group
• Must have exhausted COBRA
• Must have lost group coverage within 63 days for
  reason other than fraud or non-payment
• Can take Certificate of Creditability to any
  Carrier that writes IFP
• Rates are high

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PPO Conversion plan

• Limited plan selection
• Must be coming off at least 3 months of Group
  coverage or moving into CA
• Must apply within 31 or 63 days depending on
  circumstance
• Lousy coverage
• Must stay with previous carrier
• Very high rates

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Access For Infants Mothers (AIM)

• Health insurance for uninsured, middle income
  pregnant women
• Cost is 1.5 of adjusted annual income
• Qualifications
• Less than 30 weeks pregnant as of application
  date
• California resident
• Not on Medi-Cal or Medicare part A or B
• Uninsured or privately insured with a high
  maternity deductible or co-pay
• Monthly household income within AIM income
  guidelines

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Healthy Families Program (HFP)

• Provides low cost health, dental, and vision
  coverage
• Qualifications
• Children under age of 19
• Uninsured children with no employer-sponsored
  health insurance in the last 3 months
• California resident
• Not eligible for Medi-Cal
• Family income must be greater than 100 and less
  than 250 of Fed Income Guidelines

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Major Risk Medical Insurance Plan (MRMIP)

• Funded by 40 Million/year from Tobacco taxes
• Currently out of money, Waiting list
• 200K benefit per year, 750K lifetime
• 36 months then MRMIP Graduate program
• Still 200K per year benefit, New 750 K total
  benefit
• Qualifications
• California resident
• Not eligible for Part A or B of Medicare
• Not eligible for COBRA or Cal-Cobra
• Unable to secure adequate coverage elsewhere

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Small Group Business Coverage

• Rules Established by AB1672 in 1993
• No one can be declined regardless of health
• Must have 2 to 50 eligible people
• Can be husband and wife running a business
• All Small Group plans cover maternity
• Pre-existing conditions are covered without a
  waiting period
• For PPO, must have 6 months of creditable
  coverage within 63 days
• All HMO plans

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Why use a broker?

• Helps find plans/rates creates proposal
• Explains pro/cons of each option
• Someone to call besides insurance company
• Costs YOU nothing carrier pays commission

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Hitches and Glitches Discussion

• You are offered a severance package that includes
  company-paid continuation benefits as provided by
  COBRA is that a benefit or a curse?
• Hitches and Glitches of COBRA and HIPAA
• COBRA is not always the best economic deal it
  pays to shop around
• If you are healthy, an individual plan may be
  less expensive
• How important is it that you keep the doctor you
  have now?
• Depending on your flexibility, your health plan
  options will vary (HMO vs. PPO)
• Determine your health insurance goals?
• Comprehensive coverage with little out of pocket
  expenses will cost more
• High deductible plans with higher out of pocket
  expenses will cost less
• Short-term catastrophic coverage is the least
  expensive
• Use a broker that specializes in
  Individual/Family plans

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Sedona Benefits

• Sedona Benefits is a full service, owner
  operated, independent insurance brokerage firm
  that offers a variety of insurance products
  including Medical, Dental, Vision, Life, and
  Disability. Solutions range from personal to
  business-related products.
• Sedona Benefits serves individuals and families,
  as well as very small companies (zero to ten
  Employees) that many brokerage firms ignore
  because of their size.
• The diversity of our portfolio allows our clients
  to not only protect their families but, for those
  who are small business owners, help insure that
  their legacies are safeguarded.

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Richard E. Hemmerling Benefits Specialist CA Lic.
0D55583 Sedona Benefits 2301 Falling Water
Ct. Santa Clara, CA 95054 [phone]
Office rich_at_sedonabenefits.com
Rich spent over 30 years in Software Development
including stints at ROLM, IBM, and Xerox. During
his last 6 years in this field he held the
position of VP of Engineering. In 2002 Rich gave
up the grind of High Tech and made a significant
career switch into health insurance and employee
benefits. He became a representative of Colonial
Supplemental Insurance Company selling Voluntary
Benefit Plans. Five and a half years ago Rich
created his Brokerage firm, Sedona Benefits,
offering health, dental, vision, and life
insurance for individuals and small business. He
has offices in Santa Clara California and Sedona
Arizona. Rich holds a BS in Mathematics from San
Jose State University and an MBA from Saint
Marys College.
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Liberty Benefit Overview

• Liberty Benefit Insurance Services was founded
  in 1989 and is built upon a tradition of
  innovation, leadership, and service excellence.
• We are a full service benefit insurance
  consulting firm that provides business owners
  with end-to-end support in a variety of areas,
  however, generally in Human Resources and
  Employee Benefits.
• Were focused on developing customized benefit
  designs and administration solutions created to
  fit the strategic needs of our customers.

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Jenny L. Vonderwerth, SPHR-CA HR and Employee
Benefits Consultant CA Lic. 0E54998 Liberty
Benefit Insurance Services 5446 Thornwood Drive,
Suite 200 San Jose, CA 95123 [phone]
Office jvonderwerth_at_libertybenefit.com http//www.
linkedin.com/in/vonderwerth
Jenny Has been helping clients design total
rewards programs that address the unique needs of
their diverse workforce in a variety of
industries and at different stages of a companys
life cycle, from start-ups to mature
organizations. She served on the board of the
NCHRA/Santa Clara Regional Chapter, currently
supports the HR community by mentoring solo HR
professionals, producing educational events for
the benefit of her clients and human resource
professionals, including courses at San Jose
States Professional Development Department and
University of Cal-State East Bay where she
delivered numerous HR programs. She has been
instrumental in teaching the SHRM Learning System
to HR professionals preparing to take the PHR or
SPHR certification exam. Jenny is a member of
SHRM, NCHRA and other professional organizations.