Continuation of Health Insurance After COBRA

Once COBRA benefits are exhausted, you may not know what health insurance options are available. Provisions of the Affordable Care Act signed in March 2010 that mandate insurance companies to accept applicants regardless of prior health history do not go into effect until 2014. Until then, people have alternative options to obtain health insurance.

Types

• Depending on your health history, you may be able to qualify for an individual health insurance plan for you and your family. If you or any family member has a pre-existing condition like diabetes or heart problems, as of September 2010, each state now has a state- or federally-run high-risk pool that is designed to insure people with such conditions. If your spouse is eligible for health insurance at her company, you can also join that group health insurance plan. If you are 65 or older, you are eligible for Medicare or Medicaid.

Time Frame

• To assure continuity of coverage for pre-existing conditions, new health insurance coverage must be effective no more than 62 days after COBRA benefits terminate. Applications for individual health insurance policies can take several weeks to move through the underwriting process, especially if you or your dependents have health problems. It is best to review your options and start looking for coverage at least two to three months before COBRA benefits end.

Considerations

• Most people elect COBRA coverage because they have a health condition that requires consistent medication or care. Individual health insurance policies can be quite expensive, and you may need to see if your state offers assistance paying health insurance premiums if you are unemployed or underemployed. If your income is below state limits, your entire family (or minor dependents) may be eligible for Medicaid coverage.

Group Plan Options

• Termination of COBRA benefits is treated as a "qualifying event" if your spouse is covered by an employer's group health insurance plan. That means that you should be eligible to enroll in that group health plan without waiting until the open enrollment period. A group health insurance plan cannot deny coverage because of your health history and cannot exclude pre-existing conditions if you have been covered for the past eighteen months. You will need to obtain a Certificate of Creditable Coverage from each insurance carrier with which you've been insured for that time period to prove to the new insurance company that you had insurance coverage.

Warning

• Failure to continue insurance within 62 days of your COBRA coverage termination can mean that pre-existing conditions like diabetes will not be covered for twelve to 24 months after new coverage is obtained. The cost for individual insurance policies and the high-risk pool can be quite expensive. Insurance companies have the option to deny offering health coverage for individuals based on health history. Some companies will choose to "rider" a certain condition, meaning that it will not cover treatment related to that specific condition but will provide coverage for other problems. Other companies have underwriting policies that simply accept or decline an applicant. A licensed independent health insurance agent in your state can help you work through the available options in your state.