In our world of acronyms, COBRA and HIPPA loom large for business and individuals needing health insurance coverage.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) and HIPPA (Health Insurance Portability and Accountability Act of 1996) contain provisions creating a safety net for insured employees who leave their employers in good standing.

Certain provisions in COBRA make it possible for qualifying former employees to continue receiving group health insurance benefits for specified periods of time (most commonly up to 18 months, with exceptions.) Florida has a form of “Mini-COBRA” applicable to small business employers. Federal COBRA, on the other hand, applies to businesses having a minimum 20 employees on the payroll during the year.

COBRA continuation provisions are a blessing to the former employee not able to qualify for individual health insurance because of health history or other underwriting considerations. However, before HIPPA, those insured under COBRA had a roadblock waiting at the end of their coverage periods. Once COBRA coverage expires, the uninsurable former employee must convert his or her insurance to individual insurance under the former employer’s plan. Group conversion policies, if a plan provides for them at all, are expensive and benefits are limited. That presents a dilemma: take food off the table to pay for limited benefits, or join the ranks of the uninsured. Fortunately, HIPPA contains provisions that provide
relief.

For qualifying individuals, HIPPA offers portability of health insurance, which means the individual can switch to a new insurer and obtain comprehensive coverage without preexisting condition limitations.

To be eligible for HIPPA:

• The individual must have no other health insurance coverage or be covered by health insurance due to terminate for reasons not within his or her control.
• The individual must have been insured with “creditable coverage” for the past 18 months with no lapse in coverage of more than 63 days.
• The individual must have been insured by a group, governmental or church plan, or an individual plan that terminated from insurer’s insolvency, insurer’s withdrawal from the state, or the individual must have moved out of the insurer’s service area.
• The most recent coverage cannot have been terminated by nonpayment, fraud or misrepresentations.
• The individual must not be eligible for other group health plans, Medicare or Medicaid.
• And group continuation or COBRA continuation benefits must be exhausted (if neither was offered by your employer, contact your health insurance advisor for a full set of HIPPA rules.)

Small business owners don’t have the time or resources to stay informed about employer-sponsored health insurance issues such as COBRA and HIPPA. Start up entrepreneurs may be covered by COBRA benefits right now, but most are unaware of the available options once COBRA coverage runs out. As members of SBRN, it’s our duty to maintain the integrity of our businesses and stay up to speed on conditions that ultimately affect our clients. COBRA and HIPPA are important considerations in that mix.

Kenneth L. Smith, CLU, FLMI, owns Insurance Planning Services
and chairs SBRN’s Insurance Network. He may be contacted at
(904)285- 5255, or ksmith6288@aol.com.