Guide to Counseling on Employer- Sponsored Health Coverage

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1 Guide to Counseling on Employer- Sponsored Health Coverage February 2012 Table of Contents Introduction... 1 Assessing Current Health Coverage and Needs... 2 Understanding Employer-Sponsored Group Health Coverage... 3 Health Coverage Issues when Starting a Job... 4 HIPAA and Pre-existing Condition Exclusionary Periods... 5 Health Coverage Issues During Employment... 6 Resolving Issues with Employer-sponsored Group Health Coverage... 7 Health Coverage Issues when Leaving a Job... 8 COBRA and Medicare... 9 Additional Resources Introduction The purpose of this guide is to provide information that a CWIC can use when counseling beneficiaries on health coverage from an employer. The guide explains the basics of employersponsored health coverage. It also explains important laws that protect the beneficiary when 1 P age

2 they start a job, during the job, and when they leave the job. Two of these laws are the Health Insurance Portability and Accountability Act (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA). By sharing the information in this guide, you can help the beneficiary to make informed decisions about their employer-sponsored health coverage. The guide is organized so that you can quickly jump to the information and section that you need, based on the current situation of the beneficiary. You may use the guide, for example, when you are performing an initial assessment of the beneficiary s health coverage, or when the beneficiary is starting a new job. The Health Coverage Planning Questionnaire is a tool with questions that you can ask the beneficiary to help them think about their health coverage choices. When you are using the questionnaire, you can refer back to this guide for additional information. Assessing Current Health Coverage and Needs The first step in counseling a beneficiary on health coverage is performing an assessment of current health coverage. What type of health coverage does the beneficiary have now? You can use the Health Coverage Planning Questionnaire to record this basic information. A beneficiary may have coverage through Medicaid, Medicare, VA health benefits, health coverage from an employer, or coverage on a family member s health plan. If the beneficiary does not have health coverage, or if the beneficiary needs to decide whether or not to accept health coverage from a job, you may want to perform a health care needs assessment. What are the beneficiary s current health care needs and are these needs being met with existing health insurance? You can use the questions on page two of the Health Coverage Planning Questionnaire for this assessment. Some of the key questions to look at with the beneficiary are: What kind of health coverage does the beneficiary currently have? Are there health care needs that are not being met? How important is it for the beneficiary to find new or additional health coverage? Do the beneficiary s family members have health coverage? The answers to these questions can help the beneficiary when deciding whether or not to enroll in an employer-sponsored health plan. If the beneficiary does not have health coverage, it is important to help them explore possible options for health coverage. Medicaid is important to consider if the beneficiary does not have Medicaid. Many SSDI beneficiaries are not aware that they can qualify for Medicaid based on 2 P age

3 their disability. Other possible options are health coverage from employment or coverage on a family member s health plan. Many cities and counties have low-income health insurance programs. Lastly, programs such as Medicaid and the Children s Health Insurance Program (CHIP) can offer health coverage to the child of a beneficiary that has no coverage. Tip: The beneficiary can go to HealthCare.gov: Find Insurance Options at to learn more about health coverage options in their state. Understanding Employer-Sponsored Group Health Coverage Public versus Private Health Coverage Beneficiaries will access health coverage through both public programs and private health insurance. Medicaid, Medicare and VA health benefits are public health programs. Private health coverage can either be individual or group coverage. Private individual coverage is health insurance that an individual purchases directly from a health insurance company. It can be very expensive and is often a last resort for individuals without other health coverage. Private individual health insurance is not based on employment. Private group health coverage is coverage from an employer and is called employer-sponsored group coverage. This type of private health insurance is not purchased as an individual but as a member of a group (the employees). If the beneficiary goes to work and is offered health coverage, this coverage is private employer-sponsored group health coverage. Types of Employer-Sponsored Health Plans Employers offer a variety of different types of health coverage plans. Common types include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point of Service Plans. An important difference between these types of plans is which medical providers the beneficiary is allowed to use. Different health plans will have different costs to the beneficiary for covered medical services and prescription drugs. These costs are called out-of-pocket costs because they are costs that the beneficiary pays out of his or her own pocket. The employer can provide the beneficiary with a Summary Plan Description of the group health plan. This Summary Plan Description explains in detail what medical services are covered and how much the beneficiary will have to pay. 3 P age

4 Health Coverage Issues when Starting a Job Waiting Periods Many employers have a waiting period before health coverage for new employees begins. For example, an employee may have to wait for three months before the health coverage starts. Under federal law, the maximum waiting period allowed is six months. If the health plan offered is a Health Maintenance Organization, the HMO may have an affiliation period instead. Affiliation periods are similar to waiting periods. However, if there is an affiliation period, there cannot be a pre-existing condition exclusionary period. Affiliation periods cannot last longer than 3 months. Deciding Whether or Not to Enroll in Employer Health Coverage When a beneficiary begins a job, he or she may have to decide whether or not to enroll in the employer health plan. There may be a choice of several different health plans or coverage options. These can be important decisions for the beneficiary. The Health Coverage Planning Questionnaire has questions that you can ask the beneficiary in order to help them make these decisions. In general, it is better to have multiple types of health coverage. This might be Medicaid and employer-sponsored health coverage. Some beneficiaries will have Medicaid, Medicare and health coverage from a job. Having Medicaid allows the beneficiary to receive care at the lowest cost. Medicare and employer-sponsored health coverage provide more covered services than Medicaid, and usually allows the beneficiary to have more choices in medical providers. When there is a cost to the employee involved, the decision whether or not to enroll in employer-sponsored coverage becomes more complicated. The beneficiary must weigh the pros and cons of enrolling in the group health coverage. Here are some questions the beneficiary should consider: Is the health plan free or there a cost to the employee for the coverage? Are there several different plans or options offered? What are the costs for these? Does the current coverage that the beneficiary has meet all of their health care needs? Are there additional services provided by the employer s plan that the beneficiary wants to access? Does the plan offer coverage of family members? Is this important to the beneficiary? If there are several plans offered, the beneficiary will have to choose one based on their health care needs and the costs of the different plans. They will want to look at the Summary Plan 4 P age

5 Description to see the services that are covered and the out-of-pocket costs for services. These costs include deductibles and co-payments for different covered services, and costs for prescription drugs under the plan. Tip: If the state has a Health Insurance Premium Payment (HIPP) program, and if the beneficiary is on Medicaid, then Medicaid may be willing to pay the premiums for the employer-sponsored group coverage. For more details, ask Medicaid or look on the state Medicaid website to see if your state has a HIPP program. HIPAA and Pre-existing Condition Exclusionary Periods Summary If a beneficiary has had prior health coverage (such as Medicaid) before enrolling in an employer health plan, they can use that previous coverage to reduce or eliminate any preexisting condition exclusionary period. Employer-sponsored health plans are allowed to have a pre-existing condition exclusionary period, which is a period of time in which the beneficiary is excluded from coverage of benefits for pre-existing medical conditions. This means that if the beneficiary has certain pre-existing health conditions, treatment of those conditions may not be covered for a period of time. Under federal law, pre-existing condition exclusionary periods cannot last more than 12 months (or 18 months if the beneficiary enrolls late in the health plan). The Health Insurance Portability and Accountability Act of 1996 (HIPAA) contains regulations that limits health plans use of pre-existing condition exclusionary periods in several ways. Firstly, a health condition only qualifies as pre-existing condition if medical advice, diagnosis, care, or treatment was received in the 6 months prior to enrollment in the new health plan. Because of this, many health conditions will not count as pre-existing conditions. Secondly, HIPAA allows the employee to use prior coverage to reduce or eliminate a pre-existing condition exclusionary period. If a beneficiary has had health coverage from a previous job, or has Medicaid or Medicare, this coverage can be used to eliminate a pre-existing condition exclusionary period, as long as there was not a break of more than 63 days in which the beneficiary had no health coverage. Note: Most WIPA-eligible beneficiaries will not be subject to a pre-existing condition exclusionary period because they will have had prior health coverage through Medicaid or Medicare. 5 P age

6 Where to find more information on HIPAA The U.S. Department of Labor has an easy-to-read guide to HIPAA and group health coverage called Your Health Plan And HIPAA... Making The Law Work For You : More information can also be found on the U.S. Department of Labor website: Health Coverage Issues During Employment Special Enrollment Periods Normally, if an employee wants to make a change to their employer-sponsored health coverage, he or she will need to wait until a certain time of the year, called the Annual Open Enrollment period. During this period, the employee can enroll in the employer coverage, add a family member to the plan, or make any changes to their employer-sponsored health coverage. Under federal HIPAA law, employees can make changes outside the window of the Annual Open Enrollment period if certain events occur. These are called qualifying events and give the employee a Special Enrollment Period in which they can make changes to their employer health plan, enroll in the plan, or add a family member onto the plan. This HIPAA rule is important to beneficiaries because it can ensure that working beneficiaries do not go without health coverage if they lose other health coverage. If a beneficiary does not enroll in employersponsored health coverage, and then loses their Medicaid, they have a 30-day window in which they can enroll in the employer-sponsored health plan. They do not have to wait for the Annual Open Enrollment period, and will not have a period of time without any health coverage. Example: Jane is working at a bank. She receives SSDI and her Medicare has not started yet. When Jane started working, she decided not to enroll in the employersponsored health plan because she had Medicaid. She felt she did not need the extra health coverage, and did not want to pay the monthly premiums. Now Jane has received a promotion and a pay raise. She finds out that with her higher income she is no longer eligible for Medicaid. Under HIPAA, she has 30 days after her Medicaid ends to enroll in the employer-sponsored health plan. She does not have to wait until January for the Annual Open 6 P age

7 Enrollment period. If she did have to wait until January, she would have to go six months without any health coverage. HIPAA helps her gain access to the employer health coverage immediately. There are several qualifying events that can provide an employee with a Special Enrollment Period. These events include gaining a family member through marriage, birth, or adoption. If any family member loses any type of health coverage, this is a qualifying event under HIPAA. For example, if a beneficiary s spouse or child loses Medicaid, the beneficiary will have a 30-day Special Enrollment Period in which to add them on to the health plan at the beneficiary s job. You can learn more about HIPAA and Special Enrollment Periods in the U.S. Department of Labor publication Your Health Plan And HIPAA... Making The Law Work For You ( Resolving Issues with Employer-sponsored Group Health Coverage A beneficiary may disagree with an employer-sponsored health plan s decision about what services will be covered and paid for by the plan. When this happens, the beneficiary may not understand their rights or know how to appeal a decision. The CWIC can provide information on steps the beneficiary can take to resolve a dispute. The CWIC can also tell the beneficiary where they can receive additional assistance in resolving a dispute. In general, the first step for the beneficiary is to follow the health plan s internal process for making an appeal. If this does not resolve the issue, the beneficiary can continue to appeal. The human resources department of the employer may also be able to provide assistance with a dispute with the health plan. Health plans are required to follow state and federal rules for handling enrollees complaints and appeals. If an internal review process within the health plan does not resolve the dispute, there is most likely an outside external review process determined by state law. The links below provide information about this process in your state. At least 43 states have an external review process that the beneficiary can use in a dispute with their health plan. CWICs and beneficiaries can learn more by reading A Consumer Guide to Handling Disputes with Your Employer or Private Health Plan at Your state may have an agency that helps consumers resolve disputes with health insurance plans. Visit the web page titled A Consumer Guide to Handling Disputes with Your Private or Employer Health Plan: State-By-State External Review Programs at and follow the link for your state. Here you will find information on health insurance appeals in your state, and contact information for state agencies that can help the beneficiary. 7 P age

8 Your state s Department of Insurance can provide assistance with disputes with a health plan. Many states also have a separate agency that helps consumers who are covered under a managed care plan. Health maintenance organizations, preferred provider organizations, and point-of-service plans are all managed care plans. Contact information for these agencies can be found at and Health Coverage Issues when Leaving a Job COBRA Review COBRA (from the Consolidated Omnibus Budget Reconciliation Act) is a federal law that gives an employee the right to continue their health coverage when they leave a job. More specifically, COBRA gives an employee the right to choose to continue their employersponsored health coverage, for themselves and for any dependents, if the coverage has ended for certain reasons. In order to qualify for COBRA, an employee must have lost group health coverage because of: 1) voluntary or involuntary termination of employment, for reasons other than gross misconduct, or 2) a reduction in the hours worked. The employee can enroll in COBRA coverage and will have to pay a monthly premium to continue the individual or family health coverage plan. Note: There are other events can cause the employee or a family member to lose health coverage and become eligible to continue that coverage using COBRA. These events include: the death of a covered employee, divorce or legal separation, becoming entitled to Medicare, and a child s loss of dependent status under a health plan. The most common situation involving COBRA is when an employee leaves a job and wants to continue coverage for themselves or family members. An employee will be eligible for COBRA if they work for a private company with at least 20 employees, or for a state or local government. COBRA does not apply to employees of the federal government. Continuing Coverage under COBRA Beneficiaries can use COBRA to continue health coverage after a job ends for up to 29 months (because they are disabled according to Social Security). People who are not disabled according 8 P age

9 to Social Security can continue coverage for up to 18 months. States may have laws that allow the beneficiary to continue coverage for a longer period. The group health plan must give the employee an Election Notice of their COBRA rights when an event such as the end of employment occurs. The employee can also ask for information on continuing coverage, including how much monthly premiums will be. The employee has 60 days to choose whether or not to elect continuation coverage under COBRA. There will not be a gap in health coverage if they do enroll. Coverage under COBRA will start when coverage from employment ends. The beneficiary will have to pay up to the full cost of the health coverage each month. This will be more than the monthly premium they were paying when employed. Using COBRA to continue health coverage can be very expensive. CWICs need to help the beneficiary consider less expensive health coverage options, such as Medicaid or coverage on a family member s health plan. The beneficiary may want to continue dental coverage only, or to use COBRA for a few months only, until they can secure other health coverage. COBRA and Medicare If an SSDI beneficiary becomes eligible for Medicare, their COBRA coverage will end. If the beneficiary already has Medicare and becomes eligible for COBRA coverage, the beneficiary can choose to continue coverage under COBRA. However, this may not make sense due to the cost of the monthly COBRA premiums. It is not advisable for a beneficiary to drop Medicare Part B and enroll in COBRA coverage because, should the beneficiary later decide to pick up Part B again, he/she may have to pay a late enrollment penalty. Where to find more information on COBRA The best source of information on COBRA can be found on the U.S. Department of Labor website at and You can also read a more detailed guide to COBRA at: Information on State COBRA Laws 40 states have laws that expand COBRA protections. You can find information on your State s laws related to COBRA at: =5. 9 P age

10 At you can find state information and a link to the State agency governing COBRA laws in your state. Note that this is a private company s webpage verify the information with your state agency. Additional Resources Health Insurance Consumer Guides for the Fifty States (Provides information on HIPPA, COBRA and private health coverage laws in your state. Guide to the Family and Medical Leave Act (FMLA) (National Partnership for Women & Families) =958 Family and Medical Leave Act website by the US Department of Labor Medicare and Other Health Benefits: Your Guide to Who Pays First (CMS Publication No , Revised May P age