Byline: MICHELLE SINGLETARY COLUMNIST
WHEN I READ about WorldCom and the thousands of people losing their jobs, I think about my 7-year-old daughter in the hospital since May. Many of those workers will probably lose their health insurance. What if they have a sick child like me?
My family has health insurance through my job. But what if I was pink-slipped because of some accounting irregularity that caused my company to go bankrupt? What if my company decided that the best way to pump up its stock price was to announce major layoffs?
I'll tell you what I would do: I'd immediately sign up to continue my coverage through COBRA.
Sixty-five percent of Americans get their health insurance through their employers. There was a time when group health coverage was available only to full-time working folk and their families. If you lost your job, you would be kicked out of your employer's group health plan. That changed in 1985 with the passage of health benefit provisions in the Consolidated Omnibus Budget Reconciliation Act, or COBRA.
Under COBRA, workers who have been terminated (except for gross misconduct) or lose their health coverage because of reduced work hours can continue to maintain their group coverage for themselves and their dependents. COBRA generally applies to group health plans offered by employers with 20 or more employees.
In theory, COBRA is a good law. In practice, most workers can't afford to pick up the coverage. Only 7 percent of unemployed workers or their families used COBRA in 1999, according to the Kaiser Commission on Medicaid and the Uninsured.
Why? Are you ready for sticker shock?
In 2001, families had to pay an average of $588 a month to continue health insurance under COBRA, according to Kaiser. For an individual, the cost was about $221. Under COBRA you have to pay the full health insurance premium, including the part that your employer used to pay, plus a 2 percent administrative fee.
Depending on your circumstances, your COBRA coverage is generally limited to 18 months, although under some conditions the coverage can be extended for up to three years. You will have 60 days to accept the coverage.
Faced with the high cost of this coverage, I understand why so many people decide not to take advantage of their COBRA rights. If you or your dependents are healthy and money is tight, paying the mortgage or the car loan is your priority.
But life has a way of shifting priorities and problems. Many people who file for bankruptcy protection do so because they can no longer handle the crush of medical bills as a result of a catastrophic illness.
Here's something else to consider if you elect to forgo COBRA. You could jeopardize your future health insurance rights.
Under the federal Health Insurance Portability and Accountability Act (HIPAA), people who have continuous group health coverage can't be denied group health insurance at a later date even if they have a pre-existing health condition. But if you have a significant break in your insurance coverage - 63 or more full days in a row - you could lose that and other protections.
For example, if it has been less than 30 days since you lost your health coverage, you are eligible under HIPAA for special enrollment in your spouse's health plan.
For more information about your rights under HIPAA, check out the Centers for Medicare & Medicaid Services online resource at www.hcfa.gov/medicaid/hipaa/ online/. You should also contact your state insurance department. Many states have adopted laws that may give you the right to continued health coverage, even if you don't qualify for COBRA.
Is it fair that in a country as rich as ours there is anyone who has to worry that they will be denied health care because they can't afford it?
Absolutely not. All of us should be concerned and we should work to change a system in which receiving good health care often comes down to the jobs we hold.
But until things do change, you need to prepare for the worst. In addition to saving at least three months living expenses, pump up that bank account to include the possibility that you may have to pay your full health insurance premium.
If you lose your job, try your best to hold onto your health insurance. You never know what might happen. My husband and I had little warning that we would be spending our days and nights in a hospital room keeping vigil over our little girl hoping and praying she will live to see her 8th birthday.
That's why if you have a good income, learn to live on less. Stop buying things you don't need so when a crisis hits - medical or otherwise - you have some financial resources to fall back on, at least for a little while.
THINGS TO REMEMBER
Here are several important things to remember when you lose or change your health coverage under the Health Insurance Portability and Accountability Act:
Ask for what's called a 'certificate of creditable coverage' when leaving a job or changing your health coverage. The certificate shows how long you have had health coverage. This is an important document to have if you need to enroll in a new group health plan or need to get individual coverage.
Consider accepting COBRA, a coverage you are entitled to under federal law that gives certain employees and dependents the right to continue the same health coverage.
If you aren't eligible for COBRA, and you are a federal worker, check to see whether you qualify for Temporary Continuation of Coverage (TCC), which is available to employees who lose their Federal Employees Health Benefits Program coverage because they leave their jobs. It's also available to divorced spouses or children who lose their family member status because they become age 22 or marry.
If you can, don't allow a break in health coverage of 63 or more full days in a row.
Be cautious when converting from a group health plan to individual coverage. Converting may limit some of your protections.
Source: The Centers for Medicare & Medicaid Services.
Michelle Singletary welcomes comments and column ideas, though she cannot offer specific personal financial advice. Her e-mail address is singletarym@ washpost.com. Readers can write to her c/o The Washington Post, 1150 15th St., N.W., Washington, D.C. 20071.
