HIPAA-Health Insurance Portability When You Change Jobs--There Doesn't Have to Be a Gap in Your Health Insurance

Extensions are built into some employers' health insurance policies.

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. There is no cost for this coverage after you stop work

Extensions do not count as coverage for purposes of HIPAA.

A few examples follow.

Example 1: Sam 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, Sam 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, Sam drops the coverage he had from A Corp under 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, Sam's diabetes would also be covered under the A Corp. policy for 12 months from the date A Corp's coverage ended.

Example 2: Sandra 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, Sandra went to work for C Corp and enrolled in the new employer's health insurance plan. Because Sandra 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.

Example 3: Carey worked for his old employer for 5 years. His bout with prostate cancer was covered under his employer's health insurance. Although he started a new job a few days after leaving his old job, he continued his old health coverage under COBRA because he thought he couldn't qualify for new coverage because of his health history. By the time Carey realized he could get coverage from the new employer in spite of his health, it was after the initial sign up period. Because Carey didn't sign up on time, he is subject to an 18 month pre-existing condition exclusion with the new employer. Although he would not have had any new pre-existing condition exclusion because of his prior coverage if he had signed up on time, he's stuck with paying COBRA for the 18 months that COBRA permits while waiting out the new employer's pre-existing conditions clause, plus paying any amounts that he is required to pay as an employee under the new coverage. Even worse, if the new employer has a probationary period of 3 months, the 18 month pre-existing condition exclusion doesn't start until the end of those three months. Carey's COBRA coverage would run out 3 months before the new coverage starts.

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