Solution Driven – People Oriented Tips About Securing Health Insurance When You Are In-Between Jobs: Hitches and Glitches You’ll Want to Know HR Women and Friends General Meeting January 21, 2009 Outline of Topics • Brief overview of key legislation affecting health benefits – COBRA/Cal-COBRA – Cal-COBRA Extension (AB 1401) – HIPAA • Certificate of Credible Coverage – HIPP • Insurance for Job Seekers (Health Care Options Available) • Hitches and Glitches: Discussion What is COBRA and Cal-COBRA? • In California, there are two COBRA programs available depending on the employee population of the company for which you work (or worked): – If your company has 20 or more employees, it falls under Federal COBRA regulations – If you company has 2-19 employees, it falls under a state program called CalCOBRA • Federal COBRA is generally administrated for your employer by what is known as a "third-party administrator" or TPA. The TPA handles billing, premium payments and the administrative duties of managing those former employees and dependents who are on COBRA continuation coverage. If your employer does not use a TPA, then someone designated within the HR department usually handles all these tasks. • Cal-COBRA is a state program modeled after the federal program and is administrated by the health insurance company directly. If you were covered by any of the employer sponsored health plans, you would make your payments directly to the carrier who will handle coverage, billing and the other administrative functions. What is the Cal-COBRA Extension? • Cal-COBRA Coverage Extension (AB 1401) extended the COBRA and Cal-COBRA benefit for an additional 18 months, to a maximum of 36 months total • Until AB 1401 went into effect, you were able to elect COBRA or Cal-COBRA continuation coverage for yourself and family when you left your job. You were eligible for: – 18 months of coverage, or – 29 months of coverage if you were disabled and on SSDI, or up to – 36 months of coverage for divorce, death and other special qualifying events • Those on Cal-COBRA may simply continue their coverage for an additional 18 months after they exhaust the first 18 months. Those on federal COBRA will first use the 18 or 29 months of federal COBRA then be shifted to Cal-COBRA for the additional 7 or 18 months • Employees covered under a group health plan that does not do business in California and operates in a state other than California may not be eligible for AB 1401 continuation protections. In these cases, often the employer is domiciled in another state and that other state's rules would apply to that employer's California employees • Employees of self-funded or self-insured programs are not eligible for the extension under AB 1401 More on the COBRA/Cal-COBRA Extension • Applies only to “insured” health plans, certain disability contracts that provide medical coverage and does not apply to health plans that are self-funded or self-insured – Vision and Dental care plans are excluded; only plans that offer medical and hospital benefits are subject to the extension • Anyone starting COBRA/Cal-COBRA after January 1, 2003 must use all 36 months of eligibility in order to qualify for HIPAA Guaranteed-Issue or Conversion coverage – Previously it was 18 or 29 months depending on whether or not you were disabled – If you fail to elect the additional 7 or 18 months of Cal-COBRA, you lose all of your rights to purchase a guaranteed-issue individual contract – For those with preexisting conditions and health issues, this extends the time that they could buy an individual guaranteed-issue policy • Cost of continuation coverage under AB 1401 increases to 110% of group rates (same as Cal-COBRA), or 150% of the group rate for extensions on account of disability • Health care service plans and health insurers assume responsibility for administering coverage continuation when Cal-COBRA applies – Look for notice from carrier/plan sponsor approx. 90 days in advance of the end of COBRA period COBRA/Cal-COBRA Qualified Events, Beneficiary and Duration EVENT BENEFICIARY DURATION Termination of employment or Reduction in hours of the Covered Employee Covered Employee Spouse (of Covered Employee) Dependent Children (of Covered Employee) 18 Months* Covered Employee Spouse (of Covered Employee) Dependent Children (of Covered Employee) 29 Months* Termination of employment or Reduction in hours of the Covered Employee, with a Social Security disability determination - Death of Covered Employee - Divorce or Legal Separation of the Covered Employee & Spouse - Employee Entitlement to Medicare *Cal-COBRA (AB1401) - extends to 36 Months *Cal-COBRA (AB1401) - extends to 36 Months 36 Months Spouse (of Covered Employee) Dependent Children (of Covered Employee) Loss of Dependent Status Dependent Children (of Covered Employee) Bankruptcy Proceeding of the Employer Retiree Surviving Spouse Spouse of Retiree Dependent Child 36 Months Lifetime Until the retiree dies, plus up to 36 months What is the Health Insurance Portability and Accountability Act of 1996 (HIPAA)? • Among other provisions, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), also known as the Kennedy-Kassebaum Act, Public Law 104-191, which amends the Internal Revenue Service Code of 1986 • HIPAA improves the portability of employee health coverage, so that health coverage is less likely to be significantly interrupted when someone changes jobs (“portability”) • This is accomplished by: – placing limits on the length of any pre-existing condition exclusion period that a group health plan may apply; – requiring that group health plans consider an individual’s previous “creditable coverage” to further limit any pre-existing condition exclusion period; and – requiring plans to provide for “special enrollment” opportunities when an employee (or an eligible spouse or dependent) loses other health coverage or when the eligible employee gains a dependent through marriage, birth or adoption. • Plans Subject to HIPAA: • Most group health plans with two or more employees at the beginning of the plan year • May include coverages for nominal benefits, such as EAP programs or flexible spending accounts • In general, any plan subject to COBRA or Cal-COBRA is subject to HIPAA More about HIPAA • Three main elements of HIPAA are: – Portability: originated to protect workers from limited job mobility because of “preexisting” condition limitations imposed by health plans, referred to as “job lock” – Privacy: protects an individual’s private health information (PHI); HIPAA was amended to require small plans to comply by 4/14/2004, all other plans were required to comply 4/14/2003 – Data Security: protects data storage and security of PHI and access • Other key objectives of HIPAA are: – Develop and enforce standards for managing health information (PHI) – Standardization of electronic patient health, administrative and financial data (EDI) – Unique health identifiers for individuals, employers, health plans and health care providers – Reduce healthcare fraud and abuse • The U.S. Department of Health and Human Services has been given enforcement responsibility for HIPAA. HIPAA is federally regulated and violations of HIPAA standards carry very stiff fines and criminal penalties - including multi-year imprisonment. HIPAA Portability - Certificate Requirements • At the time an individual ceases to be covered under the plan and does not elect COBRA • At the time COBRA ends • Upon request if the request is made within 24 MONTHS of termination of coverage • Must issue certificates free of charge • Most insurance carriers automatically send these when they are advised of coverage terminations but it’s the Plan Sponsor that is ultimately accountable • TIP: KEEP A COPY OF THIS (OR THESE) CERTICIATES WITH YOUR MEDICAL FILES (coverage “creditability”) What is HIPP? • Health Insurance Premium Payment (HIPP) Program – California Department of Health Services will pay health insurance premiums for certain persons who are losing employment and have a high cost medical condition – Qualifications depend on income, Medi-Cal status, medical condition Solution Driven – People Oriented Insurance For Job-Seekers Rich Hemmerling Consultant, Sedona Benefits What Are Your Options? • COBRA • Short-term Insurance • Individual/Family Plan • HIPAA • PPO Conversion plans • Government sponsored Plans – Access for Infants & Mothers (AIM) – Health Family Program (HFP) – Major Risk Medical Insurance Program (MRMIP) • Small Group? Why Is COBRA So Expensive? • Large employers offer only a few very rich plans – Usually 1 HMO and 1 PPO – Often a low co-pay ($5 or $10) with low deductible – High premiums • Employer usually pays most if not all of Premium for employee and at least some for dependents • May be blended rates • Administration fee - 2% or 10% • Can make COBRA rates very high; can be a shock Short-term Insurance • More relaxed underwriting – Less concern about potential chronic conditions – Less concern about height/weight • Daily or monthly for up to 6 months • May be renewed once but re-underwritten • What happens if haven’t found a job when insurance runs out? • Best to use if have a job but you are in waiting period Individual/Family Plans (IFP) • Lowest Rates • Fully Underwritten • Can be rated or declined – Tiers 1 thru 5 range from 25% to 212.5% – Kaiser is the pickiest; no tiers • Coverage is month to month; no contract • Can be kept for as long as desired • Some carriers allow portability • This is best alternative if you can qualify • Don’t wait, apply before COBRA window closes IFP Considerations • Maternity Coverage is optional • If You Have Pre-existing Conditions – Waived With 6 Months Previous Creditable Coverage within 63 days – Otherwise, choose an HMO plan What can you do if you are declined? • COBRA • HIPAA Coverage • PPO Conversion plan • Government sponsored Plans – Access for Infants & Mothers – Health Family Program (HFP) – Major Risk Medical Insurance Program (MRMIP) • Find a Way To Qualify as a Small Group HIPAA Coverage • Standard IFP plans but limited selection • Requires at least 18 months of continuous coverage most recently group • Must have exhausted COBRA • Must have lost group coverage within 63 days for reason other than fraud or non-payment • Can take Certificate of Creditability to any Carrier that writes IFP • Rates are high PPO Conversion plan • Limited plan selection • Must be coming off at least 3 months of Group coverage or moving into CA • Must apply within 31 or 63 days depending on circumstance • Lousy coverage • Must stay with previous carrier • Very high rates Access For Infants & Mothers (AIM) • Health insurance for uninsured, middle income pregnant women • Cost is 1.5% of adjusted annual income • Qualifications – Less than 30 weeks pregnant as of application date – California resident – Not on Medi-Cal or Medicare part A or B – Uninsured or privately insured with a high maternity deductible or co-pay – Monthly household income within AIM income guidelines Healthy Families Program (HFP) • Provides low cost health, dental, and vision coverage • Qualifications – Children under age of 19 – Uninsured children with no employer-sponsored health insurance in the last 3 months – California resident – Not eligible for Medi-Cal – Family income must be greater than 100% and less than 250% of Fed Income Guidelines Major Risk Medical Insurance Plan (MRMIP) • Funded by $40 Million/year from Tobacco taxes • Currently out of money, Waiting list • $200K benefit per year, $750K lifetime • 36 months; then MRMIP Graduate program – Still $200K per year benefit, New $750 K total benefit • Qualifications – California resident – Not eligible for Part A or B of Medicare – Not eligible for COBRA or Cal-Cobra – Unable to secure adequate coverage elsewhere Small Group Business Coverage • Rules Established by AB1672 in 1993 • No one can be declined regardless of health • Must have 2 to 50 eligible people – Can be husband and wife running a business • All Small Group plans cover maternity • Pre-existing conditions are covered without a waiting period: – For PPO, must have 6 months of creditable coverage within 63 days – All HMO plans Why use a broker? • Helps find plans/rates – creates proposal • Explains pro/cons of each option • Someone to call besides insurance company • Costs YOU nothing – carrier pays commission Hitches and Glitches Discussion • You are offered a severance package that includes company-paid continuation benefits as provided by COBRA; is that a benefit or a curse? • Hitches and Glitches of COBRA and HIPAA – COBRA is not always the best economic deal – it pays to shop around – If you are healthy, an individual plan may be less expensive – How important is it that you keep the doctor you have now? • Depending on your flexibility, your health plan options will vary (HMO vs. PPO) – Determine your health insurance goals? • Comprehensive coverage with little out of pocket expenses will cost more • High deductible plans with higher out of pocket expenses will cost less • Short-term catastrophic coverage is the least expensive • Use a broker that specializes in Individual/Family plans Sedona Benefits Sedona Benefits is a full service, owner operated, independent insurance brokerage firm that offers a variety of insurance products including: Medical, Dental, Vision, Life, and Disability. Solutions range from personal to business-related products. Sedona Benefits serves individuals and families, as well as very small companies (zero to ten Employees) that many brokerage firms ignore because of their size. The diversity of our portfolio allows our clients to not only protect their families but, for those who are small business owners, help insure that their legacies are safeguarded. Richard E. Hemmerling Benefits Specialist CA Lic. #0D55583 Sedona Benefits 2301 Falling Water Ct. Santa Clara, CA 95054 (408) 234-4394 Office [email protected] Rich spent over 30 years in Software Development including stints at ROLM, IBM, and Xerox. During his last 6 years in this field he held the position of VP of Engineering. In 2002 Rich gave up the grind of High Tech and made a significant career switch into health insurance and employee benefits. He became a representative of Colonial Supplemental Insurance Company selling Voluntary Benefit Plans. Five and a half years ago Rich created his Brokerage firm, Sedona Benefits, offering health, dental, vision, and life insurance for individuals and small business. He has offices in Santa Clara California and Sedona Arizona. Rich holds a BS in Mathematics from San Jose State University and an MBA from Saint Mary’s College. Liberty Benefit Overview Liberty Benefit Insurance Services was founded in 1989 and is built upon a tradition of innovation, leadership, and service excellence. We are a full service benefit insurance consulting firm that provides business owners with end-to-end support in a variety of areas, however, generally in Human Resources and Employee Benefits. We’re focused on developing customized benefit designs and administration solutions created to fit the strategic needs of our customers. Jenny L. Vonderwerth, SPHR-CA HR and Employee Benefits Consultant CA Lic. #0E54998 Liberty Benefit Insurance Services 5446 Thornwood Drive, Suite 200 San Jose, CA 95123 (408) 414-1091 Office [email protected] http://www.linkedin.com/in/vonderwerth Jenny Has been helping clients design total rewards programs that address the unique needs of their diverse workforce in a variety of industries and at different stages of a company’s life cycle, from start-ups to mature organizations. She served on the board of the NCHRA/Santa Clara Regional Chapter, currently supports the HR community by mentoring solo HR professionals, producing educational events for the benefit of her clients and human resource professionals, including courses at San Jose State’s Professional Development Department and University of Cal-State East Bay where she delivered numerous HR programs. She has been instrumental in teaching the SHRM Learning System to HR professionals preparing to take the PHR or SPHR certification exam. Jenny is a member of SHRM, NCHRA and other professional organizations.