Medical insurance question: what if you have to quit your job?

Factual Questions
1

Luckily I’m not in this situation, but I’ve often wondered about it.

Let’s say you have medical insurance, through your job. It turns out you have a very serious condition - let’s say brain cancer, something like that. Due to complications of the disease, you can’t do your job anymore, and you have to quit. What happens with the medical insurance? It seems like a catch-22 - you desperately need your insurance, but you can’t do the job that gives it to you. I realize COBRA will allow you to continue the insurance, but that’s only for a fixed amount of time, correct? What happens if you’re sick longer than that fixed amount of time? And what happened pre-COBRA?

A similiar question - let’s say that you have the aforementioned brain cancer, and you know you only have a few months to live. Technically, you can do your job, but given that you’re going to die, you opt to spend your time travelling, visiting loved ones, etc. You give up your job, but it’s from personal choice rather than medical necessity. What happens there?

2

  1. COBRA begins to cover you as of the time your employer-provided coverage ceases, so long as at ceased because of a qualifying event (i.e., the termination of employment). As a result, unless your employer is not subject to COBRA (e.g., less than 20 full-time employees during the last year), then there is no “pre-COBRA” time. In addition, COBRA is available when you terminate no matter the reason. The only exception to COBRA availability for termination is if you are terminated for “gross misconduct.”

  2. If your COBRA period runs out (which is usually after 18 months so long as premiums continue to be paid), you can most likely convert your coverage to an individual policy directly from an insurance company. Such conversion is required to be made available under HIPAA, but it can be very expensive. If such insurance cannot be afforded and no other insurance is available (through a spouse’s employer or otherwise), then public assistance is available–Medicare, Medicaid, etc. To receive public aid, you must meet the eligibility requirements. Absent any other options, you can get the required treatments and the file bankruptcy to avoid paying.

“It is very expensive to die slowly in America” – Eugene Kittrich, Mission Impossible

3

By pre-COBRA, I meant before COBRA went into effects, sometime in the 1990s.

If you’ve got brain cancer, and your COBRA coverage runs out, where in the world are you going to get additional coverage? Most private insurance won’t cover existing conditions, correct?

4

Sure they will, so long as you can pay a monthly premium that exceeds the cost of your monthly coverage.

5

If you sign up for coverage, prior to the expiration of your COBRA benefits, you can get coverage. Pre-existing only applies to a time when you had NO insurance.

Or so I understand it.

IANAIA (Insurance Agent)

-Butler

6

I think you’d go on disability due to the brain cancer. I don’t think COBRA figures in.

7

COBRA is very expensive. Who can afford hundreds of dollers per month when he’s lost his job? My late mother’s (also late) husband lost his job. After COBRA, his premiums were over $700/month. Basically, his pay went to insurance premiums.

I lost my medical coverage in 2003 when I lost my job. Fortunately I’ve been pretty healthy. But I do need my wisdom teeth removed. With no insurance, I just have to live with them. IANAD, but I suspect that my wisdom teeth are causing a situation where one part of my mouth is susceptible to infections. Seems I get a painful infection in one spot every couple of months, no matter how often I brush or how often I rinse with Listerine.

Yesterday I went to the local doctor to get some antibiotics so I can stop the infection before it gets out of hand. (I haven’t taken antibiotics in 15 years or so.) $148 for the doctor visit, plus another $80 for the clindamycin. Would’ve been like $20 total if I had insurance.

This post is edging toward an IMHO piece about National Health Care and the 40 million uninsured Americans, so I’ll just say this:

$228 is much less than was being taken from my paycheque for insurance when I had a job. If you’re healthy, it seems to make sense to pay out-of-pocket. If you’re in the situation the OP describes? Die quickly and decrease the surplus population.

8

Sorry for that. I’ll save it for another thread.

My sister is on disability. There seem to be rules that limit the amount of assets you’re allowed to have.

9

Disability? Isn’t that another benefit? What if your job doesn’t offer disability insurance? I know my current job doesn’t.

And yeah, COBRA is expensive. I paid $550/month for COBRA for both me and Mr. Athena when I quit a job to move across the country. When it went up to $750/month, we got private insurance (at the time we were both self-employed) to the tune of ~$300/month for a policy that had a $1500 deductible per person per year, so effectively covered nothing except major accidents or illnesses.

10

There are different types of disability, short-term, long-term, and total/Social Security. Short and long-term are employer benefits, and you would typically still be eligible for your employer’s benefits paying only your regular share of the premium. If you are no longer able to work at all, there is Social Security Disability. There may be a limit on the amount of assets you can have, and they are very strict about the disability truly making you unable to work at all in any job, not just your prior field. Details on that are here

http://www.ssa.gov/disability/

11

Three kinds of disability:

Temporary disability insurance: Some employers provide this; in most cases, you pay the premium, but you get to take advantage of group underwriting.

Long-term disability insurance: In most cases you have to buy this yourself. A lot of small business owners and self-employed people get this kind.

Social Security Disability: You’ve probably been paying premiums for this since your first paycheck. This is social security insurance provided by the social security administration. You don’t qualify until you are unable to work for a year. http://www.ssa.gov/dibplan/dqualify.htm

12

It’s incorrect to state that SS disability can’t be obtained until a full year passes.
From the Social Security disability page, bolding added:

13

meant to say unless–not until. Sorry.

14

A couple of misconceptions that I want to address regarding COBRA:

COBRA is not medical insurance itself, it is a law that allows individuals who leave employment for whatever reason (except for gross misconduct) the right to continue the same type of medical and/or dental (vision, etc.) coverage that they had previously before terminating employment. The reason why some of these premiums are much higher is that the employer most likely paid a good portion if not most or all of the premium when you were employed. It also depends on your level of coverage ($5, $10, $15, $25 copays for office visits, $0, $100, $250, $500, $1000 copays for hospitalizations, different levels of copays for meds, etc., etc., etc.)…so a business may pay as little as a $125/month for a 22 year old with $25 copay office visits with a high hospitalization deductible, or a business might pay as high as $800/month for a 56 year old with $5 copay for office visits and no hospital deductible. Group rates are always cheaper than individual rates once you find the exact same type of coverage with a particular medical insurance company…but some medical insurance companies are cheaper than others though. I cannot stress this enough…SHOP AND COMPARE PRICES AND TYPES OF COVERAGE. Your employer can only offer what they only currently have w.r.t. the medical insurer(s) used, the types of coverage, etc. You might be able to do better finding coverage with a cheaper company’s individual policy. SHOP AND COMPARE.

When the employee is terminated, they are given the option to take over those same exact coverages except now they are to pay the whole amount themselves, not the employer. Also, up to a 2% administration fee can be legally attached to the premium to cover mailings, billings, etc. done by your ex-employer, or the medical insurance company.

The law states that you can continue this type of coverage for 18 months, but if you have condition that makes you disabled to work, it can be extended another 11 months to 29. And then on top of that, if you have an ongoing disability (to the point of permanent?..not sure), it can be extended another 7 months for a total of 36 months. I’m pretty sure that cancer would qualify as a disability in order for those extensions.

15

Currently my insurance company’s output to me is over $500,000. I’m sure the monthly payments on dialysis supplies alone is a few hundred dollars. By the way, one nice thing about Michigan is that there’s a state law that an insurange company must pay 100% on any diabetic equipment or medicine

I’m glad I like my job because I don’t think I could ever leave.

16

I don’t know how it works in America, but here in the U.K. we have Critical Illness insurance. Indeed, it’s often required by mortgage companies.

17

Athena, from all I’ve found out about this situation, in the US at least, basically you’re screwed.

Disability insurance does not pay medical expenses, but provides living expenses for those who qualify due to an inability to work.

COBRA is expensive only to the degree that health insurance is expensive or, to put it another way, to the degree that employee health benefits are valuable; what you pay for COBRA is what the employer pays for that same group coverage for it’s current employees plus 3%.

A couple of years ago my COBRA eligibility ended. db4530 has it right – HIPAA now requires that continuation coverage be available, but timing is critical and the coverage can be expensive. But without HIPAA, you’d be thrown on the (nonexistent) mercies of the private insurance market or the minimal US public health system.

butler1850, unfortunately, the preexisting condition exclusion means that the insurer can decide your rates or your eligibility based on your medical history or preexisting medical conditions. Getting medical insurance on your own, i.e, not group coverage, can be very difficult and expensive. Insurers will ask for a record of every doctor’s visit or prescription you’ve ever taken. They’re essentially looking for any excuse to deny coverage. Fit, healthy individuals are turned down because of things like a course of treatment and vicodin prescription for a severe compound fracture, and no, I am not making this up.

If your health is nearly perfect and you’re not too old, individual health insurance isn’t too outrageous, relatively speaking. But if you get off the plan, getting back on is like starting all over again.

There is some variability from state to state. In California, there is a High Risk pool where companies that offer health insurance in the state each have to take a certain number of high risk individuals that are assigned to them. In 2003, the waiting list from date of application to beginning of coverage was estimated at 6 yo 9 months. The deductible was quite high – I don’t recall what copayment and coinsurance rates are. On the plus side, I don’t think there’s any means test to be eligible for this program.

Medicaid, however, is means tested. Which to the best of my knowledge means to be eligible you have to have very little income and next to no assets. I think the income level is $24,000 or less, which is not very darn much in the US. You can probably own a car if it’s not worth too much. A house – I don’t know.

This is why such a large share of bankruptcies in the US are due to medical bills.