I received a call today from someone who didn’t know they had options when their COBRA coverage ended. I receive these calls on a regular basis. Most people opt for COBRA when their employment terminates and they don’t have another viable option. COBRA is an option that is well known and employers are required to make this continuation of coverage available to all eligible employees. The alternative to COBRA is an individual/family plan if one doesn’t obtain new employer coverage. Many times, the options in the individual/family market are limited due to pre-existing health conditions that they or their family members have. COBRA, though expensive, is a better alternative than no coverage at all. Purchasing individual coverage (personal health plans) is a great option if the applicant is healthy and not taking expensive medications. Carriers can easily decline applicants or offer highly rated policies — sometimes 75% more than standard rates — or they can exclude coverage for pre-existing conditions and medications. In these kinds of situations, COBRA can make more sense.
So, what happens to the person or family in Georgia who opts for COBRA due to pre-existing health conditions and then they near the end of the 18 months that COBRA lasts? Unlike losing employer coverage, there is no one proactively telling COBRA insureds that they have options when their plan terminates.
Well, it is important to know and evaluate all the options available. I will cover the two main options (aside from applying for coverage in the individual plan market again). However, there are other options available — those options are what I call “out-of-the-box” solutions. Most people I talk to had never considered these solutions, but I think it’s important to explore all possible options, even ones that may take a little maneuvering to accomplish. This “maneuvering” is ethical and legal, it just takes at little more effort.
So, the two main options to consider after COBRA are the GA State Assignment System and the Enhanced Conversion Plan. The Assignment System (officially named the Georgia Health Insurance Assignment System) is available to those individuals on COBRA who are declined for coverage in the individual market. Everyone who is eligible is accepted into this program.
Due to provisions in HIPAA — the Health Insurance Portability and Accountability Act — that was passed in 1996, people with serious pre-existing health conditions are protected from losing their group coverage. In Georgia, insurers are required to accept individuals when their COBRA coverage ends and they can’t obtain individual health insurance. These people are “assigned” to the insurer. The insurer is required by the Georgia Insurance Commissioners office to offer two standardized health plans. A schedule of benefits for these plans, along with an application, can be obtained by calling our office.
According to the Georgia statute: “The Commissioner shall fix a maximum premium to be charged for each such standard health benefit plan which shall be not more than 150 percent of the average premium which is or would be charged by all managed care organizations in the state for the same or similar coverage issued other than under this Code section, as determined by the Commissioner.” In other words, these plans are expensive, but within reason.
The other option mentioned — the Enhanced Conversion plan — is available to those who were covered under a fully-insured group plan. The carrier is then required, under HIPAA, to offer an individual health policy.
While these options may seem a bit confusing, a knowledgeable agent can guide you through the process of finding the most appropriate option.
An important thing to remember is never allow your COBRA to lapse! I have received several calls over the years from people who allowed this to happen. The Georgia Health Insurance Assignment System plans and the Enhanced Conversion plans are no longer available to those who lose their COBRA coverage — no exceptions.
Peachtree Insurance Adviosrs www.insuranceADV.com 678-236-1600
