Millions of people each year lose access to the Arizona health insurance they were offered through an employer (group health insurance coverage) due to a job change, divorce, job loss or other reason. Fortunately, many people are able to continue their group coverage, at least temporarily, through a continuation of coverage program.
Most people who are able to continue their group health insurance benefits are eligible to do so according to federal law called the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). However, COBRA does not apply to all employers, so many states have developed other continuation-of-coverage options for people who are not covered by COBRA. Also, many people leaving group insurance to buy individual Arizona health insurance privately have portability benefits required by another federal law.
Most Americans with employer-sponsored health insurance have the option of continuing that coverage for 18-36 months, at their own cost, if they lose access to their coverage. If your employer is required to abide by COBRA, and if you are qualified to receive benefits under it, you also have to experience what is known as a qualifying event to be eligible for coverage. For each type of person receiving COBRA benefits, the various qualifying events are:
Spouse of the Covered Employee
Dependent Children of the Covered Employee
How long an individual can receive COBRA benefits depends on who is receiving the benefit and what qualifying event is involved. Employees, dependent children and dependent spouses can continue coverage for 18 months when the qualifying event is job termination or a reduction of work hours. Children and spouses can continue coverage for up to 36 months if a covered employee becomes eligible for Medicare or dies, if there is a divorce or legal separation, or if the child loses dependent status.
Yes. When you receive COBRA benefits, the cost involved for coverage may increase from what you were paying previously. Employers that paid for all or part of your health insurance premiums before COBRA may continue to do so, but they are not legally required to and that is not the norm. Under COBRA, most beneficiaries are required by their employer to pay the entire amount it costs to insure them. In addition, there may be a two-percent administrative fee charged to them, but overall costs charged to the COBRA recipients cannot exceed 102% of their premium. If an individual or family on COBRA does not make timely premium payments to the group plan, they may be terminated by the group plan and lose their coverage and COBRA rights.
In terms of which types of group health plans are subject to COBRA,
plans for employers with 20 or more employees on more than 50% of its
typical business days in the previous calendar year are subject to its
requirements. Both full- and part-time employees are counted to
determine whether a plan is subject to COBRA. Each part-time employee is
counted as a fraction of an employee, with the fraction equal to the
number of hours that the part-time employee worked divided by the hours
an employee must work to be considered full-time.
COBRA applies to private employers and state and local government health plans, but it does not apply to federal government plans and those sponsored by certain church organizations. (The federal government offers its own continuation-of-coverage benefits to eligible individuals.) COBRA also does not apply if a company goes out of business or if it ceases to offer group health insurance to its employees.
Within Arizona group health plans that are subject to COBRA, individuals must be what are known as qualified beneficiaries in order to receive benefits. A qualified beneficiary generally is an individual covered by the group health plan on the day before a qualifying event who is an employee, the employee's spouse, or an employee's dependent child. In certain cases, a retired employee, the retired employee's spouse, and the retired employee's dependent children may be qualified beneficiaries. In addition, any child born to or placed for adoption with a covered employee during the period of COBRA coverage is considered a qualified beneficiary. Agents, independent contractors and directors who participate in the group health plan may also be qualified beneficiaries.
The U.S. Department of Labor regulates COBRA, and it has published a list of frequently asked questions for consumers. You can also call (866) 444-3272 for additional information or assistance.
If I am not eligible for COBRA coverage, how do I find out if I have other options?
Many states have enacted legislation requiring smaller employers and
others not bound by COBRA to offer some type of continuation-of-coverage
benefits to their employees. In addition, many states have requirements
that allow individuals who are transitioning out of group coverage to
convert their group policy into an individual health insurance policy
that they pay for privately. NAHU's Health Care Coverage Options
Database contains information about each state's laws concerning
continuation of coverage and individual policy conversion options.
Do I have any rights after I finish COBRA or state continuation coverage? What if neither of those two options was available to me?
In addition to COBRA and any state laws concerning continuation of coverage, a different federal law requires every state develop at least one option for people who are transitioning out of group coverage in order to let them purchase an individual health insurance policy without the possibility of rejection due to a pre-existing medical condition. The federal law that requires this is known as the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
People who are eligible to purchase these health insurance policies are known as having group-to-individual portability rights under HIPAA and are often called HIPAA-eligibles or federally eligible individuals. The various states have developed a wide range of mechanisms to provide coverage to their HIPAA-eligible populations, the most common of which is allowing them to purchase coverage thorough a state individual market high-risk health insurance pool . To find out what your rights are in your state, please check NAHU's Health Care Coverage Options Database.
Individual Portability Coverage
and Conversion Coverage
Applicants losing group or COBRA health coverage
(from any health insurer):
You may be eligible for individual portability coverage. This coverage does not require medical underwriting, and there is no waiting period for preexisting conditions on BluePreferred, BluePreferred Saver and BluePreferred Basic, or for normal maternity services on BlueSelect. However, the premium rates for portability coverage are substantially higher than premium rates for medically underwritten individual coverage. You must meet specific criteria to qualify for individual portability coverage.
(all requirements must be met)
1. You must apply for portability coverage within 63 days after the date your group or COBRA coverage ends.
2. Your most recent health insurance coverage was a group health plan provided through an employer with at least two or more employees. This includes continuation coverage, such as COBRA, under the group plan.
3. You have at least 18 months of prior health insurance coverage, including any combination of group health coverage provided by your employer (insured or self-insured), individual health coverage, Medicare, Medicaid, a federal or state public health plan (including but not limited to AHCCCS) and public health plans provided by a foreign government, TRICARE, a health benefits risk pool, the Peace Corps, Bonafide Association, Indian Health Services Federal Employee Health Benefits Plan (FEHBP) or the State Children's Health Insurance Program (SCHIP).
4. In the past 18 months, you did not have a break in coverage that lasted more than 63 days. Insurance waiting periods required by your employer and application processing times are not counted toward the 63-day break in coverage.
5. You are not eligible for other group health insurance, Medicare, Medicaid or AHCCCS.
6. You are not covered under any other health insurance.
7. If your employer offered continuation coverage under the group plan (COBRA) or your state offered continuation coverage (mini-COBRA), you must have accepted this coverage and exhausted it. If you are a federal employee, you must have accepted TCC (temporary continuation coverage) and exhausted it.
8. You are a resident of Arizona.
To remain eligible for individual portability coverage, your individual portability coverage application must be received by BCBSAZ within 63 days after your group or COBRA coverage termination date. Should you fail to meet this deadline, you will be ineligible for portability coverage from any insurance company. In addition, your last coverage before enrolling in the portability product must be group or COBRA coverage. Your eligibility will end if you purchase any other type of health coverage, such as short-term individual coverage or individual conversion coverage, to fill the gap between the termination date of group coverage and the effective date of portability coverage.
If you are eligible for portability coverage but choose to apply for underwritten coverage (with lower premium rates), we recommend that you purchase individual portability coverage while your application is being processed for underwritten individual coverage because the underwriting process may take more than 63 days. Once you are approved for underwritten coverage, your adjusted rate would be effective either the 1st or 15th day of the month following the date of underwriting approval. If BCBSAZ approves your application for medically underwritten coverage and later determines you misstated or omitted medical information on your application, your underwritten coverage may be voided and you may no longer be eligible for individual portability coverage.
Remember, to remain eligible for Individual Portability Coverage, your Individual Portability Coverage application must be received by Blue Cross Blue Shield of Arizona within 63 days after your group or COBRA coverage termination date. To ensure continuous coverage, your application must be received before your group or COBRA coverage termination date.
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