Switching from One Health Plan to Another
When you are changing jobs, losing your job, leaving a job for other adventures, or taking an early retirement, there are many questions you may have about how it will affect your health care coverage. Educating yourself on your rights and options will ensure you make the best decisions for your situation.
If you are losing employer coverage, you will generally have the following options:
- Temporarily continue the same group plan under COBRA
- Purchase individual coverage through the Health Insurance Marketplace or directly from the health carrier
- Enroll in another group health plan you may be eligible for, such as your spouse’s plan
- A short-term or limited duration plan
Consolidated Omnibus Reconciliation Act (COBRA)
COBRA is a federal law that may give you the right to continue employer provided group health coverage on a temporary basis after you, your spouse, or your parent leaves an employer with 20 or more employees. Employers of 20 or more workers must comply, including employers who provide coverage through Self-Funded Health Care Plans. COBRA does NOT apply to health plans sponsored by the federal government and some church-related organizations.
After receiving a notice of a qualifying event, the health plan must provide you with a notice to elect COBRA within 14 days. The election period lasts for 60 days. If you choose to purchase the COBRA coverage, you are insured from the date the employer group coverage ended, even if you wait until the 59th day to apply. You must pay the entire premium, including any part your employer had been paying, plus up to an additional 2 percent for administrative expenses.
You can purchase COBRA coverage for:
- 18 months
- 29 months if you became eligible for Social Security disability during the first 60 days of COBRA coverage
- 36 months if you were insured through your spouse's or parent's employer and the spouse or parent has become eligible for Medicare, died, divorced, or separated or if you are a dependent child who has reached the age beyond eligibility.
COBRA is not this simple! Your employer's personnel office should have a booklet that explains the details. You may also contact the U.S. Department of Labor’s Employee Benefits Security Administration or at 866-444-3272.
Information for employers can be found at An Employers Guide to Group Health Continuation Coverage Under COBRA.
Other Than COBRA Continuation of Coverage
If you lose your employer group coverage and the Michigan employer has fewer than 20 employees, you do not have COBRA rights. However, you do have the option to purchase individual coverage from a health carrier either through the Health Insurance Marketplace or directly from the carrier.
Short-Term or Limited Duration Plans
A short-term health plan is designed to bridge gaps in your health care coverage during a period of transition, such as being between jobs or waiting for an employers group coverage to begin. It is important to know short-term plans are exempt from many provisions of the ACA:
- They do not cover pre-existing conditions
- Are not guaranteed renewable
- Do not satisfy the individual mandate and you may be subject to the tax penalty
- Can only be in force for a period of 90 days with the same health carrier
While short-term health plans do not satisfy the individual mandate requirement, the tax penalty, would only apply if you are uninsured for more than two months. There are also exemptions from the requirement to have health insurance.
Moving From One Employer Group Plan to Another Employer Group Plan
The federal Health Insurance Portability and Accountability Act (HIPAA) applies if you are covered by your employer’s group health plan and you move to a different employer that also offers health coverage. Your new employer’s group health plan must cover any dependent that was covered under the plan with the old employer, if the new employer’s group plan provides dependent coverage. Your new employer’s group health plan may cost more and provide different coverage. If the new employer health plan offers dependent coverage, it must have a special enrollment period for you to add a dependent because of marriage, birth, adoption, or loss of other coverage. Under the ACA, group health plans may not include pre-existing condition exclusions. This includes grandfathered and transitional plans.
If you work for a small employer (from 2-50 employees), and coverage is provided by an insurance company, the law allows an affiliation waiting period of not more than 90 days, at the employer’s option before coverage is effective.
Moving from an Employer Group Plan to an Individual Plan
In Michigan, if you have lost your employer group coverage and still want to maintain health coverage, you can purchase individual coverage from a health carrier either through the Health Insurance Marketplace or directly from a health carrier. The Health Insurance Marketplace has an annual open enrollment period; however, loss of employer group coverage outside of open enrollment would qualify you for a special enrollment period of 60 days during which you could purchase coverage in the Marketplace.