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Work: Changing Your Job Or Career

When You Change Jobs, There Does Not Have to Be a Gap in Your Health Insurance

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Thanks to various federal and state laws, there does not have to be a gap in your health insurance when you change jobs.

COBRA permits you to continue to have health insurance from your current employer to cover you through a probationary period.

If you had your health insurance for a sufficient period of time, because of HIPAA the new employer's coverage will take over at the end of the probationary period. There will noty be an exclusion or a waiting period for a pre-existing condition. If there is, an extension of your current coverage may cover -- or you can pay under COBRA.

Coverage During The Probation Period

Many employers require a probation period when a new employee is hired to see if the relationship will work and to be sure people don’t join a company just to get benefits. The probation period can last up to six months.

During a probation period, a new employee is not eligible for any of the employer’s benefits, including health insurance. The probation period is the time when you are literally on probation with the new employer, rather than a permanent hire.

Under a federal and similar state laws known as COBRA, you have the right to stay on your former employer’s plan for 18 (and possibly 36 months) until the new employer’s insurance starts. The key is not when you start work with the new employer, but when you actually become covered by the new employer’s health insurance.

While your health insurance from your employer is continued under COBRA, you will pay the monthly premiums, to a maximum of 102% of the premium the former employer is charged for the coverage.

Coverage During The Pre-Existing Conditions Waiting Period

Most health insurance policies include a provision known as a Pre-Existing Conditions Waiting Period for health conditions which started before the effective date of the new coverage. The provisions postpone coverage for up to 12 months and, in some case, longer.

While a pre-existing condition exclusion is in effect, expenses relating to any new health conditions are covered but not any expenses relating to pre-existing health conditions.

There are three different ways that you may be covered for your pre-existing health condition during a Pre-Existing Conditions Waiting Period: HIPAA, COBRA and through extensions.

    • Before HIPAA, someone changing jobs had to go through the Pre-Existing Conditions Waiting Period all over again even though they were covered under a prior employer's plan.
    • HIPAA provides limitations on a new pre-existing condition waiting period and provides credit against that condition for your previous coverage.
    • To learn more, see HIPAA.
    • If you worked for an employer with enough employees, you can continue coverage from your previous employer for up to 18 months. You will have to pay the premiums for the continued coverage, as well as whatever part employees pay at the new employer. If there weren't enough employees for COBRA to apply, a state law may.
    • To learn more, see COBRA.
  • Extensions
    • Extensions are built into many employers' health insurance policies. They aren't talked about a lot and there is nothing to do to continue them when an employee leaves an employer.
    • An extension provides that if you are being treated for a health condition when your coverage terminates, you will continue to be covered for that same condition (but not any other health conditions) for 12 months from the date your former health coverage stops.
    • If there is an extension in the policy, it automatically goes into effect.
    • Extensions do not count as coverage for purposes of HIPAA.

Two Examples Of How COBRA, HIPAA and An Extension Can Work Together To Prevent Job Lock

  • Example One: Mitch has diabetes and has worked at A Corp. for four years. He changed jobs and went to work for B Corp. His coverage at B Corp. doesn't start until he has been there for a probationary period of three months (90 days). Under COBRA, he can continue A Corp's health insurance while he goes through the 90 day waiting period at B Corp.
  • Once he becomes covered under B Corp's health insurance, Mitch drops the coverage he had from A Corp under his COBRA. He gives the health insurer at B Corp. a Certificate Of Creditable Coverage that shows he had coverage with A Corp. for four years which lasted to the day he got his coverage from B Corp. This allows him to be covered for charges related to his diabetes immediately without having to go through a new Pre-Existing Conditions Waiting Period.
  •  If the A Corp. health insurance policy had an extension provision, Mitch's diabetes would also be covered under the A Corp. policy for 12 months from the date A Corp's coverage ended.
  • Example Two: Debra had Medicaid because she was disabled due to HIV and was collecting Supplemental Security Income (SSI). She lost her SSI and Medicaid when her mother died leaving her $25,000 from a life insurance policy. Six months later, Debra went to work for C Corp and enrolled in the new employer's health insurance plan. Because she had no coverage within 63 days of getting the health insurance from C Corp, she will be covered under C Corp's health insurance for any illness not related to her HIV, but she will have to wait until the health plan's Pre-Existing Conditions Waiting Period expires before she will be covered for charges related to HIV.
  • NOTE: If a pre-existing condition exclusion may apply to you solely because you did not have a full 12 months of previous health coverage, see Pre-Existing Conditions Limitations.

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