By Marge Beck
Q: I am currently covered under COBRA from my prior employer. My new employer is going to implement a new health plan effective June 1. My COBRA premium is due May 15. What happens if I don’t pay it?
I would advise you to do the following:
First, call the current COBRA vendor and determine if you are allowed to make a partial premium payment due to the fact that you will have replacement coverage on the 1st and you do not want to pay double premiums. If that is acceptable, it’s likely a good idea to pay the partial premium so you have coverage during the two weeks.
If you don’t pay the premium and you are covered under the new plan on June 1 (you don’t get laid off or nothing has changed), then you will receive credit for “time served” under your prior plan toward any pre-existing condition limitation. Typically, plans do not cover pre-existing conditions until you have been covered six months under the plan. But this “prior qualifying coverage” applies. If you have been covered more than six months on your prior plan and do not have more than a 63-day break in coverage, then you won’t have to worry about pre-existing condition limitation. Your only risk is if you have a claim between May 15 and June 1; you won’t be covered.
Q: I received a letter from my company’s COBRA administrator saying that my COBRA ends after 18 months. Someone said that it would go for 36 months. What’s up?
The extension for the additional 18 months is known as Cal-COBRA and applies only to companies that are domiciled (headquartered) in California. Also, Cal-COBRA is administered by the insurance company directly.
So, perhaps your employer is domiciled outside California. If your employer is a California company, then it’s likely that the insurance company has not been notified that you have used up your Federal COBRA and now should be Cal-COBRA.
Note that the additional premium that can be charged for Federal COBRA is 2 percent, while the Cal-COBRA surcharge is 10 percent. Contact your employer or the insurance company directly to be sure you receive the extension if it is available to you.
Q: Our daughter has finished school and is between jobs. What do we do about her health insurance?
You have a couple of options. First, she can continue under COBRA with the same benefits that you have. She will pay 100 percent of the premium, plus a small surcharge. If she has health problems, this is likely a godsend. She has 60 days from her qualifying event to make the election. Check with your plan to determine if the event is graduation date or if they will let her stay on through the summer.
She can apply for temporary insurance. This usually requires simplified underwriting and has some limitations, but it works well for short-term situations. Or she can apply for her own individual policy. The industry has introduced some less-comprehensive plans that are designed for young persons. Just be aware of the reason the premiums might be less. For example, some cover only generic drugs or have no maternity benefits.
Q: So what does COBRA stand for, anyway?
COBRA is an acronym for Consolidated Omnibus Budget Reconciliation Act. It was passed in 1986 and has many provisions that address continuation of health care benefits from an employer-sponsored plan.
Margaret R. Beck owns and operates Affiliated Benefit Services at 1348 Market St., Suite 208 in Redding where she is a licensed CLU (chartered life underwriter), ChFC (chartered financial consultant) and CEBS (certified employee benefit specialist). She may be reached at (530) 225-8583 and mailto:mrb1348@gmail.com
