COBRA is available in Pennsylvania if you are employed at a business that has more than 20 full-time employees and you recently lost your job. If your company has less than 20 workers, you may not be eligible for benefits and will have to seek separate coverage for yourself and any additional family member. The Consolidated Omnibus Budget Reconciliation Act, along with state and federal legislation, is designed to help you find affordable Pa health insurance.
However, there are affordable alternatives that will provide medical coverage until you secure another policy through an employer or become eligible for Medicare. Enrolling for a federal Marketplace policy (discussed below) and applying for private coverage are available. Some of your options are also provided under the Continuation Health law.
How Cobra Works
Since 1986, under certain conditions, terminated employees may purchase health insurance coverage without any medical underwriting. No physicals or health-related questions are needed, and no waiting periods or special exclusions will be imposed. Coverage is guaranteed, and the premiums charged will be the same (plus 2%) the employer pays to provide the same benefits to current employees. Your spouse and dependents can also take advantage of the offer.
To obtain benefits, a “qualifying event” must have taken place, and to apply for coverage, you must be the “qualifying beneficiary.” Common situations that qualify include losing group coverage from your employer, losing significant hours at work, divorce or death of your spouse that was the primary insured, and Medicare-eligibility for your husband or wife. There are also several situations where your child can become eligible.
But your premiums may appear to be substantially higher since the employer is no longer paying any part of the cost of the policy. If your working hours were simply reduced, you would not be eligible. Also, if you were guilty of “gross misconduct,” the same would apply. And of course, life and disability benefits would not be included. Typically, by contacting your human resources (HR) department through your employer, you can view specific prices and benefits.
Although you can exclude your family (spouse and/or dependents) from coverage (assuming you are the eligible person), your dependents can not accept coverage alone. For example, if your wife needs coverage but you don’t, both persons would have to accept benefits to have her covered. However, an easier option is utilizing a “Special Enrollment Period” for only the persons that need coverage.
Also, children may be eligible for CHIP (Children’s Health Insurance Program) coverage, which is a very low-cost option with excellent benefits. Thousands of youngsters are actually eligible for benefits, but don’t realize how easily they could qualify. When household income is too high for Medicaid-eligibility, CHIP is a perfect solution. Common plan benefits include immunizations, doctor visits, inpatient/outpatient hospitalization, ER and Urgent Care, dental, vision, and prescription drugs.
NOTE: Seniors that are receiving Medicare benefits (and possibly Medigap coverage in the form of a Supplement or Advantage plan), can not receive COBRA benefits at the same time.
Pa Health Exchange (Marketplace)
Open Enrollment for Exchange plans, features many mandatory benefits and guaranteed-approval. When the Affordable Care Act was passed (and subsequently survived a Supreme Court challenge), a new set of low-cost options immediately became available for persons that lost benefits through their employer. Although an Appellate Court ruled against the Obamacare tax credits in July of 2014, it was later again upheld.
Whether you need to obtain a policy during the official Open Enrollment period (typically from November through January), or outside of that date range, you can take advantage of many of the new provisions in the law, including not having to provide medical details to qualify for coverage. The instant federal tax credit will immediately reduce your premium if you qualify. You can also obtain guaranteed-issue coverage without a federal subsidy, although the rate will be significantly higher.
Missed Open Enrollment?
Since most persons become eligible for COBRA outside of Open Enrollment, a special SEP exemption (Special Enrollment Period) is offered if you lose job benefits. You are provided 60 days to select a plan with full access to the federal subsidy. During this period of time, we can help you choose the best options. Catastrophic, HSA, and comprehensive plans are offered and they can be kept short-term or long-term.
You will not lose any of the benefits or tax credits that are available during the standard Open Enrollment period, and you can pick policies from several companies that have large provider networks in your area. You will also avoid the non-compliance penalty (tax) that is imposed if you have a lapse in coverage. Currently, the tax is 2.5% of household income or $695 per adult and $347.50 per child, whichever is higher. The maximum penalty for an entire family is $2,085. with the penalty increasing each year.
In 2009, a “Mini-COBRA” law was enacted. Under this legislation, workers at small businesses (2-19 employees) can purchase coverage for up to nine months from the date that leave their employer. Spouses and dependents are also eligible to apply for benefits. One of the qualifications is that you must have been working at the company for at least three consecutive months before leaving. Naturally, if you receive Medicare benefits, you are ineligible.
For example, typical health insurance coverage for a family in Western Pa, may be approximately $100-$1,200 per month, depending on deductible amounts, size and eligibility of subsidy, and other copays and coinsurance amounts. For this situation, let’s assume the group policy offered by the employer costs $900 per month. However, if they were paying 50% of the premium, your portion would only be $450 or about $105 per week (since there are four months with extra pay periods).
If you are not able to qualify for a fairly large Obamacare federal tax credit (subsidy) you may be forced to pay the entire $900 when it becomes a private plan. Administrative costs can increase the premium an additional 5%. Of course, if you do not have any serious medical problems, COBRA may not be an ideal solution. And it’s always important to remember to avoid terminating an existing plan without consulting a broker.
Dependents Are Also Eligible
Your dependents (spouse and children) can also enroll, although if you are retired, there may be limitations. However, not every family member has to apply for coverage. For example, if the spouse and children are in perfect health, there may not be a reason to consider COBRA benefits on them, since the rate might be considerably higher than your own personal plan that you purchase on the open market. Your expected household income will be a large factor when determining the best options.
Regardless of which plans are chosen, each policy will be a “guarantee issue” contract with no medical underwriting. So regardless if one member has been previously denied or forced to pay a higher premium, this will no longer occur. Thus, the attractiveness of not selecting a COBRA plan becomes larger. Marketplace policies are also “guarantee-issue” and pre-existing conditions are also covered.
What often occurs, is that the primary applicant accepts COBRA coverage at a fairly reasonable cost, based on existing conditions and reduced pricing since the full family rate is not charged. The spouse and children can now choose among dozens of different policies from many Pa insurers. It will then be easy to customize coverage based on the needs of the spouse and kids.
In this scenario, the monthly COBRA premium for two adults and two children might be $1,400, which is very high. However, it may be possible to find an adult/children plan for about $400 and elect single COBRA coverage for another $400. Thus, $600 per month would be saved.
If the household income for that specific year is lower than previous years (because of loss of employment), the Obamacare subsidy may be large enough to provide greater savings.
Different COBRA Options
If office visit and RX benefits are a priority, there will be many affordable options. Also, if your family budget is the most important factor, then a high deductible or catastrophic (if you meet ACA guidelines) plan will be the solution. An important feature is that you don’t always have to place all family members under one policy. Naturally, we help you find the most economical choices, and provide a COBRA question-and-answer guide that may be helpful.
Although a few years ago, the employer-related policy may have provided additional coverage that a private plan did not offer, with the passage of The Affordable Care Act, this is usually no longer true. Two examples are the comprehensive maternity and mental illness benefits that are covered on the policy you buy. There are many other specific benefits, such as pediatric dental, and chiropractor visits, that are often covered under Marketplace plans.
If you are being treated for those conditions, or feel it is important to continue to have those benefits, then COBRA or a private plan will cover expenses. Prior to 2014, many individual policies that you purchased would limit or exclude maternity benefits. However, any new qualified policy is required to be “guarantee-issue” and eliminate the pre-existing condition exclusion clause.
Declining COBRA AND Marketplace Plan Offers
If you choose to decline offers From COBRA and private Marketplace coverage, an “off-Exchange” plan that does not contain any of the mandated benefits required by prior legislation, will be your only choice (assuming you do not qualify for Medicaid or Medicare). Often, these “limited benefit” plans are fairly cheap, but leave gaping holes in catastrophic claims, and often limit drug and office visit coverage. However, a new Open Enrollment period typically begins in November of each year, and you can easily apply for coverage through our website.
UPDATES FROM THE PAST:
September 2014 – With Open Enrollment beginning in less than 2 1/2 months, consumers paying a high COBRA rate will have the opportunity to compare 2015 plans and perhaps select better coverage at a lower rate. Although prices will be slightly increasing from 2014, there may be some worthwhile offers in your area.
If your income is expected to substantially drop in 2015, your subsidy eligibility may change and/or you may qualify for a much larger amount from the federal government. If your current plan is already being subsidized by your employer, and you don’t qualify for a substantial subsidy, it’s likely you should keep your current policy.
October 2016 – Since UnitedHealthcare and Aetna no longer offer Marketplace coverage, Independence Blue Cross (IBX) is the only option in the Philadelphia area.