COBRA and HIPAA Coverage

COBRA, the Consolidation Omnibus Budget Reconciliation Act, established in 1986 through Federal legislation, affects companies with twenty or more employees. One provision of the law allows you to purchase your employer's medical coverage for you and/or your family for an eighteen month period in the event you leave the company.

The premium for COBRA health insurance policies can be rather pricey. If you know you will be leaving your current employer, you may wish to do your homework to determine if there is a less expensive alternative available. If you decide to purchase your own/private policy, be sure you check to see if there is an exclusion clause for any conditions you have had treated before the policy became affective!

Here's an example:

You have decided to move out of state and will have to leave your current employer. You are told by your human resource representative that the premium for your policy will cost $1500/month for you and your family. You decide to go with a private policy that will only cost $500 a month to insure your whole family.

You have had your new policy for three months when your asthma becomes uncontrolled with your usual medications and requires treatment in an urgent clinic. Despite your policy covering urgent care visits at 90%, you receive a bill for the full amount of $750.

A notation on your EOB (explanation of benefits) indicates there is a one year waiting period/exclusion for treatment related to pre-existing conditions. In this case, you will be financially responsible for any asthma related treatments and/or medications for a full year.

Health Insurance Portability and Accountability Act (HIPAA) plans:

In August of 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA). While there are five Titles under this act, let's focus on the one that impacts your health insurance coverage, Title I.

Title I eliminates the health insurance companies' ability to exclude any pre-existing conditions when you are purchasing a private policy for you and/or your family. To purchase a HIPAA policy you must meet certain criteria. The criteria are as follows:

  • You must have 18 months of continuous medical coverage (through a COBRA policy),
  • Your most recent coverage was under an employer's group insurance plan,
  • Your COBRA health insurance policy has expired (and was not canceled as the result of failure to pay your premium),
  • You are not eligible for Medicare or Medicaid.


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