Moving Between Health Plans

By Author: Marcus Stalder
Total Articles: 491
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Back in 1986, Congress produced the exciting Consolidated Budget Reconciliation Act (COBRA). This is a vital statute. When coverage is lost in a number of specified situations, a temporary continuation of the health coverage at group rates is offered. These rates are usually lower than the equivalent individual health coverage. So, let's say you have been working for a firm with more than 20 employees and are moving between jobs. You will voluntarily leave the first job, and not because you are actually being dismissed. When you join the new employer, there's often a delay before you are allowed entry to the health plan. In many cases, this can be a gap of up six or more months during which you have no cover, but COBRA offers gap coverage for up to 18 months, overcoming almost all difficulties. Extensions are available in a limited number of situations.

It's unfortunate that the insurance industry has never felt any pressure to improve the portability of insurance rights. In other countries where there's national healthcare provision, people can move freely between jobs without any break in coverage. Even where there ...
... are private insurance policies in place, these are often for the individual rather than tied to a particular employment. Only in the US is a law like COBRA required to fill the gap. Why is this important today?

As the recession sits so persistently across the US, unemployment is remaining around an average of 9.6%. As the supply of labor exceeds demand, it's difficult for people to move smoothly between jobs. Even if this is achieved, the pressure on insurance companies' profit margins means they are increasing the premium rates for employers and delaying access to the existing plans. Indeed, many employers are now passing on many of these premium increases to their employees - hardly a fair response. The effect is actually widen the gap in coverage between jobs and more employed people are looking at COBRA as a way of protecting themselves, their spouses and dependents. FInding the cash to pay for the cover through COBRA can be a struggle, but it's better than paying for private cover, even short-term.

At this time, it's been sobering to watch the behavior of Congressman Andy Harris. Newly elected on a platform opposing Obamacare, this GOP representative has been complaining about the 28-day gap between his previous group plan and the government health plan. Having to pay for short-term health insurance is usually affordable for anyone in good health. Paid through COBRA at group rates it's even less expensive. Yet the Congressman has been complaining at this unexpected expense. So much for the understanding of a medical doctor who campaigned on his knowledge of the healthcare service. Putting the politics aside, the reaction of the Congressman is actually not that different from the many employees who change jobs only to find they have to put their hands in their own pockets to cover the gap. Something should be done to improve mobility between group health insurance plans. No matter how good COBRA, it's just a temporary patch that should be replaced by a permanent solution.