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February 2003
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The Department of Labor’s Employee Benefits Security
Administration (EBSA), administers the Employee Retirement Income Security
Act of 1974 (ERISA), which governs group health plans.
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This fact sheet provides basic information regarding
options you may have if your health coverage can no longer pay benefits. For
example, there are health coverage providers known as multiple employer
welfare arrangements (MEWAs), which provide health and other benefits to
employees of two or more unrelated employers. Although some MEWAs provide
valuable coverage, other MEWAs cannot pay claims because of insolvency or
fraud, causing the MEWA to file for bankruptcy or to go out of business. If
this happens to you, here are some options to consider for obtaining
alternative health coverage. These options implicate the health coverage
portability provisions of the Health Insurance Portability and
Accountability Act (HIPAA) and the health coverage continuation provisions
of the Consolidated Omnibus Budget Reconciliation Act (COBRA).
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HIPAA Special Enrollment in Another Group Health Plan.
If other employment-based, group coverage is available to you (such as
coverage through a spouse’s employer-provided plan), consider special
enrollment in that plan. It is usually the most comprehensive and
cost-effective coverage option available to you in this circumstance.
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Special enrollment provides you and your family members
an opportunity to enroll in a plan for which you are otherwise eligible,
regardless of any open enrollment, after you experience a loss of other
health coverage (or you experience certain life changes, such as marriage,
birth of a child, adoption, or placement for adoption). However, to qualify,
you must request enrollment within 30 days of losing eligibility for
other coverage (or within 30 days of the life change). Once you request
enrollment, it must become effective no later than the first day of the
month following your request. For more information on special enrollment,
you may want to read Questions & Answers: Recent Changes in Health Care
Laws from (see “For More Information” on the last page of this fact
sheet to get a copy).
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Health Coverage Through a Government Program.
You may qualify for health coverage through State or Federal government
programs. Information on government programs such as Medicaid (for
low-income individuals and individuals with special needs), State Children’s
Health Insurance Programs (for children of qualified families), or
Medicare (for people aged 65 and over, and for certain people who are
disabled or have end-stage renal disease) is available through your State
insurance department or the U.S. Department of Health and Human Services,
Center for Medicare and Medicaid Services, at 1.800.MEDICARE.
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Individual Health Insurance. Another option to consider
is individual health insurance coverage. You may be guaranteed access to such
coverage, without any pre-existing condition exclusions, if:
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You had health coverage for at least 18
months without a significant break in coverage (generally a break in
coverage of 63 days or more) and your most recent period of coverage was
under an employment-based group health plan;
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Group coverage was not terminated because
of fraud or failure to pay premiums;
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You either were not eligible for COBRA
continuation coverage (or similar State program), or, if eligible for COBRA
coverage (or similar State program), you both elected and exhausted COBRA
coverage; and
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You are not eligible for other health
coverage.
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Individual coverage often cost more than similar coverage obtained through
special enrollment in a group plan. More information on individual health
coverage is available from your State insurance department or the Department
of Health and Human Services, Center for Medicare and Medicaid Services, at
410.786.1565 or www.cms.gov.
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Research the Benefits Provided under Particular
Coverage Options. When considering your health coverage options,
you should examine the scope of the coverage (including benefit coverage and
limitations, visit limits, and dollar limits), premiums, cost-sharing
(including co-payments and deductibles), and waiting periods for coverage.
For information on the coverage through a particular group health plan, you
should review the summary plan description (SPD – a document often
referred to as an insurance booklet that describes the plan’s health
coverage and what it will cost you). Call the plan administrator and request
a copy if you don’t have one.
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Act Quickly. Although some States may extend
these time frames for certain types of insured coverage, to ensure special
enrollment in another group health plan, you must request enrollment within
30 days of losing other coverage. Similarly, to obtain health coverage
without a pre-existing condition exclusion (whether through an individual
insurance policy or through another employment-based group health plan), you
cannot have a break in coverage of 63 days or more.
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Don’t Wait for a Missing HIPAA Certificate of Creditable
Coverage. Regardless of what option you choose for your next health
coverage, you may be asked for a HIPAA certificate of creditable coverage, which
provides evidence of prior health coverage under the MEWA. However, if the MEWA
has gone out of business, this certificate may be hard to obtain. There is
another way you can provide evidence of your creditable coverage. Follow these
three steps:
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Provide the new plan or insurer a written
statement signed by you describing your prior coverage and its dates.
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Include some corroborating evidence, such
as a pay stub that reflects a deduction for health insurance, a prescription
drug card, or an Explanation of Benefits (EOB) statement; and
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Cooperate with the prospective health plan
in any reasonable to verify your prior coverage.
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Learn more about rights to coverage in the EBSA
publication Questions and Answers: Recent
Changes in Health Care Law.
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This fact sheet has been developed by the U.S. Department
of Labor, Employee Benefits Security Administration, Washington, DC 20210.
It will be made available in alternate formats upon request: Voice phone:
202.693.8664; TTY: 202.501.3911. In addition, the information in this fact
sheet constitutes a small entity compliance guide for purposes of the Small
Business Regulatory Enforcement Fairness Act of 1996.
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