Post-COBRA Healthcare

Following is the research I did into post-COBRA health insurance options. These apply to everyone, but in my case I knew that I have at least one, possibly two, pre-existing conditions that would disqualify me from a “regular” private policy so this is particularly focused toward those who might have a similar dilemma.

Keep in mind that this is just a lay person's assessment inan area that is under constant revision.

This does not provide any advice or guidance on how to make a selection such as premiums, deductibles, out of pocket expenses, HMO vs. PPO, etc.

Susan Bickford

October 2005

I. Some basic guidelines

- Some of this is California-specific. It is all USA-specific.

- Above all else, maintain continuous coverage. This is CRITICAL. If you maintain continuous coverage, you can get insurance. It will "just" cost money. If you go without insurance, your options narrowdramatically.

- If you know you have pre-existing conditions or you think youmight (and you might be surprised both positively and negatively),it is probably a good idea to work with an agent. Rules and policieschange every year. Some conditions are forever but others have timeperiods associated with them. Some conditions may be removable (losingweight, surgical solutions...). Different carriers may differ in howthey look at some conditions. Answering questions in the right way (but not lying) can be critical. An agent can help you in person the waythat an on-line service generally cannot. Several agents in the Bay Area recommended by Sun Alumni are listed at theend of this email. If you are sure that you are 100% OK, then usingone of the internet health options is a good way to go.

- Don't lie. If the insurance company finds out you lied, they will drop you instantaneously and even retro-actively (e.g. send you back allyour premiums).

- Avoid getting denied coverage. Once you have been denied coverage certain other options go away. For example, many short term policieswon't take you or won't cover those conditions. However, ironicallythere are cases where you need to be denied to qualify for certaingovernment programs. LOOK BEFORE YOU LEAP. The consequences of denialmight be significant.

- If applying for a "regular" underwritten policy, it maybe worth meeting ahead of time with you doctor(s) to go overconditions and let them know they will be contacted.

- Rates change when crossing ages divisible by 5 (40, 45, 50, 55...)

- Rules, policies, and rates change every year.

II. Post-COBRA Options when you have pre-existing conditions

  1. Policies offered through placed like eHealthInsurance,CostCo, direct insurance sites, etc.
  2. These are still just regular insurance policieswith possibly better pricing.
  3. Same rules applywith pre-existing conditions. Yours may actuallybe OK, maybe not.
  4. Be careful about being denied.

2. Professional organizations, etc.

  • Most I have seen are the same as #1.
  • Others likethe NASE offer "swiss cheese" policies where thereis a per cause deductible ($500), so the actualdeductible could be huge. Read policies carefully.
  • IEEE might have one that allows for pre-existing conditions
  • Must have been a member for 2 years
  • Must have had continuous coverage

3.AARP

  • Doesn't offer anything in CA yet. Then we'll see.Could be the same as #1.

4. Short term policies

  • May be lower cost.
  • May be able to get a policy withpre-existing conditions but those conditions areusually not covered. No preventative care coverage.
  • Only good for up to 12 months so you will have to rotateto a new one every year.
  • This may get cut off if youdevelop an ailment they don't like.
  • May not be able toget one at all if you have been denied a policyfrom someone else.
  • Seems to me like they should be usedfor what they're meant for: short term bridges, but somepeople have done well by them and like them.

5. California Department of Managed Care

  • Manages/oversees policies for the uninsurable.
  • MRMIP is theacronym for the Major Risk Pool policies.
  • Only a limitednumber of policies are available, so you may have to stand inline for a while.
  • Can only hold for 36 months.
  • Not greatpolicies, e.g. $75K maximum each year (poor catastrophic).
  • Requires proof of denial of coverage.
  • Other states may haveequivalent agency.

6. HSAs

  • Unfortunately, none of the HIPAA (see #10) plans I qualify forcan be used with an HSA, but this is something to keepan eye on.
  • In general the strategy is to select a lower costpolicy with a high-ish deductible (e.g. $2.5K).
  • You MUST bedisciplined about putting the dollars saved on policyor other $$ every month into HSA account.
  • These arepre-tax $$$.
  • First year may be sort of a wash becausethe HSA has to get big enough.
  • Then, start payingthe deductible from insurance policy out of HSA account.
  • This is an evolving option and potentiallyvery worthwhile for anyone to consider as part of theirhealth insurance "portfolio".

7. Group Insurance

  • It is illegal to form a group or business with theintent of qualifying for health insurance (darn).
  • All sortsof documentation are required as proof. A group isa minimum of 2 people, but only one has to take apolicy as long as the group/business is legit.
  • Musthave been in business for at least 1/2 of previousquarter.
  • These will usually still have pre-existing conditionexclusions IF YOU DON'T HAVE CONTINUOUS COVERAGE.
  • Rate tables are the same from 2 to 50 employees,but the Rate Adjustment Factor (R.A.F.) may be lower as moreemployees enter the group. This, of course, has the effect oflowering your monthly cost.

8. HMOs

  • HMO plans are offered by Kaiser, Aetna, Blue Cross, BlueShield, Health Net, PacifiCare, etc. in the Bay Area.
  • There are some counties (such as Monterey and SanBenito) where NO HMO plans exist, and other, like Santa Cruz, where some are and some are not.
  • Some plans let you selectyour provider network, others like Kaiser, make you use theirs.
  • Most people can qualify with pre-existing conditions for Kaiser,but I have heard this is not always the case.
  • Other HMO policiesmay not take you either except as a HIPAA thing (see #10).

9. PacifiCare Self Employment Insurance

  • Only carried by some brokers, I am told.
  • HMO policy. Must use an approved facility (e.g. PAMF…).
  • Not cheap($600+), but excellent coverage if this type of policy suitsyou.
  • You must prove that you are self-employed (things likea Schedule C on your tax return).
  • Dental isavailable as an extra.
  • Payment must be received by 25th of eachpreceding month.
  • These are not age rated policies, so you neednot be concerned about turning an age divisible by 5 affectingyour rates.

10. HIPAA (Federal Law) Guarantee Issue Plans

  • If you cannot get a normal individual policy due to pre-existingconditions AND YOU HAVE CONTINUOUS COVERAGE, you qualify for these plans once COBRA runs out.
  • These are offered by everyinsurance carrier in your state that offersindividual policies.
  • You may select from at least two policiesfrom all available carriers, regardless of the coverage orcarrier you had under COBRA.
  • However, once you make yourselection, you are married to that policy as there is no "openenrollment" or other opportunity to switch.
  • You can keep the policy until you qualify for Medicare if you'd like.
  • Rates can (and will) change/go up, particularly as you crossage boundaries.
  • Some are the same cost as high-priced regular plans but usually have higher deductibles and the lower costoptions are absent.
  • HMO and PPO plans available.
  • Note that inCalifornia there are no plans that can be use with an HSA atthis point in time. This could change, however.You cannot apply until COBRA is just about to end, so there isalmost always a gap of 2-6 weeks before new coverage kicksin.
  • This is covered retroactively, but it can be risky.
  • It is not possible to get a short term policy AND one of theseto mitigate risk.
  • Cannot retain these if you get another policy (e.g. throughjob). Either hold on to this or drop it.
  • Startups are tricky because if you get insurance and then youare let go, you do get 18 months COBRA, but if thestartup/business goes under, then COBRA stops.
  • In that case youmust apply for another HIPAA policy immediately. So in the caseof working for a startup and you have a HIPAA policy it might beworth holding onto that and foregoing the company policy.

11. Dental plans

  • Some dental plans are available HMO style. ~$30/month.
  • Usually very restricted list.
  • PPO style policy available,~$40/month.
  • Not great coverage.
  • Usually $1K max./year, and sometimes a 12-month waiting period for "big stuff."

III. Agents who have been recommended (alphabetical order):

Janice Gough

(650) 342-7744

Gough Insurance & Financial Services

49 South Claremont Street

San Mateo, CA94401

Betty Lindstrom

Lindstrom Insurance

Felton, CA

831.335.5812

Stuart Phillips

360 Via Largo

Morgan Hill, CA95037

408-782-8903

408-313-4491 cell

Skype: critmark

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