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Say 'AaaH' | Health Dollars & Sense

A COBRA That's On Your Side

March 13, 2000|Bob Rosenblatt

A woman who left her job gave birth a few weeks later to premature twins. She kept her health insurance, something you can do under federal law if you continue paying the premiums. The tiny babies had several health problems, requiring a 95-day hospital stay and a whopping tab of $418,000 for their medical care. If that wasn't enough strain for the new mother, her insurer then balked at paying most of the bill. The insurer claimed it was responsible for paying for the delivery but was not obligated to pay for the children's medical care during the long hospital stay. Because the babies weren't on the woman's insurance policy while she was employed, the insurer reasoned, they were ineligible for coverage for the extended care.

The distraught mother called the Labor Department's Pension and Welfare Benefits Administration, which intervened on her behalf. A Labor Department investigator reminded the insurance company that because the woman was paying the medical premiums, she was entitled to the same coverage as workers. Children are fully covered, even if they are born after the worker leaves a job. The insurance company agreed to pay the $418,000.

The happy ending for this mother's story was another illustration that "common sense is built into the law," said Leslie Kramerich, acting assistant secretary of labor, who runs the Pension and Welfare Benefits Administration. "And we always try to apply common sense with people to get problems worked out."

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The story should be a reminder to everyone with health insurance at work to have at least a nodding knowledge of the existence of the Consolidated Omnibus Budget Reconciliation Act, known as COBRA, passed by Congress in 1986. But the statute remains obscure because workers don't think about it until they are out of work and must make some tough decisions.

"It's not something people sit down and study till they need it. When they need help, they need it fast," Kramerich said, noting that COBRA inquiries comprised more than 50,000 of the 88,000 health care questions handled by her agency last year.

COBRA applies to anyone with a group health insurance policy in a firm with 20 or more workers. The federal government updated COBRA rules this year in an effort to clarify the complex law.

Here is the latest word on COBRA protection: A worker who leaves a job for any reason other than being fired for gross misconduct can retain her health insurance. She agrees to pay the full premium--both the worker's and the company's share--plus a 2% administrative fee. Whether the worker quits, is laid off or retires, her right to keep health insurance is fully protected for 18 months. If the worker becomes disabled, coverage will be extended for another 11 months beyond the first 18.

When a worker with health coverage for the family dies, the widowed spouse and children can continue the insurance for 36 months. The same 36-month extension also applies in the event of a divorce and also to dependent children who reach an age at which coverage would otherwise cease. The age varies, usually from 18 to 21, depending on the health plan.

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All of these changes in a worker's situation are called "qualifying events," and the firm has to notify its insurance company, which is required to notify the worker or the affected family of the right to buy COBRA coverage.

The former worker has 60 days to opt for coverage, and then 45 days after that to pay the first month's premium. Although the protection can last for 18 months or longer, a worker can pay premiums monthly and may cancel at any time, if he gets another job with health insurance or finds a cheaper policy.

Workers and their families are protected even if something goes wrong with the paperwork and notifications.

"You do not lose your right to buy COBRA coverage if you never got the notice in the first place," said Kramerich. She cited the case of a woman who left her job and later needed a life-saving liver transplant. She was never told by her employer of her option to continue coverage under COBRA. The Labor Department intervened on her behalf, and she got retroactive coverage with the insurer required to pay for the transplant.

The new rules adopted this year emphasize that a company must notify workers of their rights under COBRA at the time they first become covered under the firm's health insurance plan. The Pension and Welfare Benefits Administration has boosted its regional office staff to 80 people answering inquiries about COBRA and other federal insurance-related laws. Check the local phone book under U.S. Labor Department, Pension and Welfare Benefits Administration. Free publications are available at (800) 998-7542. The Web site is at http://www.dol.gov/dol/pwba.

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California has its own version of the law, called Cal-COBRA (officially known as the California Continuation Benefits Replacement Act), which extends benefits to small firms with two to 19 employees.

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