While on the hunt for a new job, one important but often overlooked scenario is what to do about health insurance coverage when you change employers. Health insurance not only covers routine and preventive medical services, but also protects policyholders from otherwise costly treatment in the event of a serious injury or illness. Do you know when your current group health benefits will expire once you resign from your current position and when your new employer's plan will be effective? And more important, are you aware of the risks associated with being uninsured? There may be a temporary lapse in employer coverage during this transition; however there are several options available to ensure continuous medical coverage.
Importance of Remaining Insured
An individual between jobs may put off seeking temporary health insurance due to the immediate out-of-pocket cost. But while funds may be tight during your change in employment, insurance is a necessity to obtain access to medical treatment in the event of an accident or injury or to treat a pre-existing condition. It is estimated that 18,000 people die each year in the United States due to lack of medical insurance coverage. This is likely due to uninsured families opting to go without health care due to fear of unmanageable medical bills. According to the U.S. Department of Health & Human Services, 58 percent of hospital bills received by uninsured Americans total $10,000 or more while the average family can afford to pay only 12 percent of that amount. Individuals who are insured are typically responsible for paying only their annual deductible, which averages around $1,200 per person per calendar year. Looking at the total cost of treatment from this perspective, it is easy to see how insurance coverage can save you money.
One option for health insurance coverage is through the Consolidated Omnibus Budget Reconciliation Act, which allows former employees and their dependents the option to continue their group health insurance coverage under the company's group rate. The out-of-pocket expense under COBRA is significantly more than the insurance premium amount for active employees because the employer does not share the premium cost. Individuals have 60 days to decide whether to elect COBRA continuation, and upon election, 45 days to pay the first month’s premium.
New Employer Plan
Once you have accepted a new position, inquire about health insurance coverage so that proper arrangements can be made to prevent a lapse in coverage. Confirm the effective date of your new employer's plan with your human resources representative or plan administrator. Depending on the dates of coverage, you may be able to transfer from your old policy to your new employer’s plan with no interruption in coverage. For example, if you leave your job on the 10th of the month and your employer’s plan provides coverage through the end of the month, you will not experience a break in coverage as long as your new plan is effective the first of the following month. In this case, you will simply elect coverage in your new group health insurance plan once you begin your new job by completing the appropriate enrollment form provided by human resources. Your new insurance company may request a letter of creditable coverage to process your application. This letter can be requested from your previous insurance company and provides information such as the type of plan you were previously insured under as well as the start and stop dates for that policy.
Spouse or Parent
Many employers impose a waiting period of 60 to 90 days before new employees are eligible for enrollment in the group plan. In this case, married individuals may look into being temporarily added to a spouse’s plan, and single individuals age 26 or under may consider coverage under a parent’s insurance plan until they are eligible for their own coverage. The Health Insurance Portability and Accountability Act offers special enrollment rights for qualifying life change events, which include changing jobs. If you are electing this option, you must be added to your spouse's or parent’s plan within 30 days of your separation date from your previous employer and you would do so by having your spouse or parent complete a medical enrollment form adding you as a dependent on their insurance policy.
If the above-listed options are not available to you, consider purchasing an individual medical insurance policy. This is typically the most expensive option but can be instrumental in avoiding a lapse in insurance coverage when there are no other insurance options available to you. This is especially true for individuals who have pre-existing medical conditions, as a lapse in coverage may prevent you from being covered by future group or individual plans.
One other alternative is a short-term health insurance plan. These plans provide coverage for a fixed period ranging from six months to a year and protect policyholders from major medical expenses. While these plans tend to offer less expensive premiums than COBRA or individual plans, they do not cover as many visits and services and are generally not considered to be creditable coverage under HIPPA. Most short-term plans also do not cover treatment of pre-existing medical conditions.
- U.S. Department of Labor: Continuation of Health Coverage — COBRA
- U.S. Dept of Labor: Portability of Health Coverage (HIPAA)
- eHealthInsurance: Short Term Health Insurance
- U.S. Department of Health & Human Services: Most uninsured unable to pay hospital bills according to new HHS report
- Fox News: Health Insurance Costly, But Cheaper Than Being Uninsured
- Jupiterimages/Creatas/Getty Images
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