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What to Do If Your Employer Stops Medical Insurance Benefits

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 What to Do If Your Employer Stops Medical Insurance Benefits
What to Do If Your Employer Stops Medical Insurance Benefits

What to Do If Your Employer Stops Medical Insurance Benefits

There is a growing concern among Americans that they might lose medical insurance provided by their employers. For some reason people have started anticipating that their employers might discontinue health insurance benefits. This thought is very disturbing and make the people insecure because the huge costs of medical care are just not affordable by most people on their own.

People can take assurance from the fact that it is not a totally hopeless situation if anything like that does happen. The two best options which safeguard the interests of the policyholders are –

  • COBRA
  • Short term policies

COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) lays down rules about employee health care insurance provided by the employer. The important aspects which benefit the employee are –

  • Any company with 20 or more employees has to give health insurance benefits to its employees.
  • The insurance benefit has to be extended to ex-employees also. The company has to continue the insurance benefits for a period of 18 to 36 months, after the termination of the job.
  • If the company does decide to stop medical insurance benefits it cannot do so immediately. The company is required to give a prior notification to employers before discontinuing medical benefits.
  • The medical benefits to employers have to be slowly phased out within 18 months so that they have enough time to look for other insurance sources.

These regulations make sure that employees are not left without health insurance overnight. However when a person takes his health insurance from his former employer, he has to pay the premium to his ex-company. He will continue to get the group rates but still it may be expensive to manage this personally. The other option is buying a short-term insurance for the interim period.

Short Term Insurance Policies

These provide a useful alternative to COBRA covered health benefits. It may turn out to be cheaper than continuing with the old insurance from the former employer. Some of the features of these types of insurance are –

  • Contracts can be as short as 1 month and can be extended to 11 months and more
  • Applicants have to be below 65 years
  • Pre-existing medical conditions are not allowed
  • Preventive care is not covered by short-term policies
  • Rigid restrictions regarding previous refusal of policy
  • Medical procedures and requirements have to be pre-approved by the insurance company

The rules of short-term policies are stricter and premiums are high comparatively. But the greatest advantage is that it provides some medical cover during a person’s transition period. This is the reason that these policies are becoming so popular in the recent times.

There is no solid reason for the apprehension of the people about losing their employer given medical benefits because employers have not given any such indication yet. In case you lose your job, you will still have time to look for a new insurance while you are in the COBRA stipulated period or get a short-term policy temporarily. The wisest thing to do here would be to start the insurance shopping process long before you run out of time.

What to Do If Your Employer Stops Medical Insurance Benefits


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