For most workers, access to health insurance is linked to their employment status. If that status changes, so does the insurance that comes with it. According to a 2002 Workplace Health Insurance Survey conducted by the Commonwealth Fund, a private foundation that supports independent research on health and social issues, job loss was the primary reason that the majority of adults (52%) lacked health insurance at some point during 2001, when unemployment increased significantly.

PHOTO BY SUSAN MORRISSEY

Is it possible to get health insurance after your employment status changes? Yes, it is possible, but you might have to pay more than you did previously, and depending on the option you choose, coverage may be more restrictive. A number of federal and local laws govern continuance of insurance coverage.

For example, the Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets the minimum standards for voluntarily established pension and health insurance plans in private industry. ERISA has been amended a number of times; two important amendments with respect to health insurance coverage are the Consolidated Budget Reconciliation Act of 1986 (COBRA) and the Health Insurance Portability & Accountability Act of 1996 (HIPAA).

COBRA gives workers who lose their health benefits the right to choose to continue group health benefits under certain circumstances, called qualifying events. Employers with 20 or more employees in the prior year who have group health plans are subject to COBRA. It applies to both private-sector employers and state and local governments.

Qualifying events for covered employees and family members include termination of employment (except for gross misconduct), reduced work hours, and divorce or legal separation. COBRA coverage is not available if your employer goes bankrupt, because there is no company plan to connect the coverage to.

Covered employees can maintain health care coverage for themselves and their dependents for 18 months. Coverage can be extended up to 36 months in certain cases.

If you elect COBRA coverage, you are generally required to pay 102% of the total cost--the premium plus a 2% administrative fee. That could increase to 150% if you receive the 11-month disability extension of coverage.

"Once people start to see the cost of health care under COBRA, they usually experience sticker shock," says Cindy Mazer, manager of health and group benefits for Rohm and Haas. "We have seen people try to access health care at a lower cost, but those evaluations have to be done in a timely manner because there are deadlines to meet if they ultimately decide to take COBRA coverage." The deadlines regarding COBRA are strict: Your employer has 14 days to notify you of your right to continue coverage, and you have 60 days from the date of notification to elect COBRA coverage.

According to the Commonwealth Fund's survey, only 23% of employed, insured adults would be "very likely" to elect COBRA coverage if they lost their jobs, because of the costs. When asked if they would elect COBRA if tax credits or premium assistance in the form of a subsidy were available, 59% said yes.

Should you elect to continue your coverage under COBRA? It depends, according to Geof Kusch, director of global benefits for Dow Chemical. "Employees should evaluate their personal circumstances in deciding whether they should take COBRA. There is no overall advice about whether they should pay for coverage or find coverage elsewhere."

COST SHOULDN'T be the only consideration; your family's health care needs and the financial risk of going without insurance also factor into the decision. If you have a preexisting condition, are pregnant or plan to become pregnant, need prescriptions frequently, or have children, then COBRA is probably the best route, since you may not find cheaper insurance on your own.

On the other hand, if you're healthy, you can probably find cheaper insurance with some trade-offs, such as higher copayments and deductibles. "We try to help our people understand that there may be more affordable options than COBRA," says Rob Johnson, manager of health and welfare plans for Eastman Chemical.

Traditionally, health insurance companies have tried to hold down costs through "preexisting condition" clauses. Preexisting condition exclusions limit or deny benefits for a medical condition that existed before the date that coverage begins. But HIPAA limits the ability of group health plans to exclude coverage for preexisting conditions.

IF YOU HAD diabetes and switched to a new health plan before HIPAA was enacted in 1996, for instance, your diabetes would have been considered a preexisting condition and excluded from coverage under your new plan. But now, group health plans must cover a preexisting condition no more than 12 months after an individual enrolls in the plan. For late enrollees, the exclusion can last up to 18 months. (A late enrollee is someone who does not enroll in a group health plan at the first opportunity but does enroll later during the plan's general open enrollment period.)

Under HIPAA, an employer health plan must give newly hired individuals credit for the length of time that they had prior continuous health coverage, without a break in coverage for 63 days or more. (Most health insurance in the U.S. is considered creditable coverage.) If your coverage is both creditable and continuous, the 12-month exclusion period could be reduced or even eliminated.

HIPAA prohibits discrimination against employees and their dependents by ensuring that a group health plan cannot exclude you from coverage or charge you more than another member of the group, based on your health factors (that is, health status, medical history, claims history, or genetic information).

HIPAA was enacted to address insurance portability, particularly for those who have preexisting conditions, but it does not regulate the cost of the insurance. Your health factors can't be used to determine your premiums; however, premiums may vary on the basis of other factors, such as age, gender, geographic location, or family composition.

HIPAA requires insurance companies to sell insurance to people; it doesn't say the plan has to be affordable to everyone. This is especially true if you seek to qualify as an individual under HIPAA, because individual health plans are "medically underwritten," meaning that the policy reflects your age and state of health. So even though you won't be rejected, you will likely pay higher rates.

Short-term medical coverage is another way to temporarily fill a gap in health care coverage. Characterized by low premiums and high deductibles, these policies are a safety net in the event of an unexpected illness or injury as opposed to a comprehensive day-to-day health insurance plan.

Benefits are limited under these plans; preexisting conditions, routine exams, preventive care (including maternity and child wellness), and dental care aren't covered. Coverage is available for periods of 30 to 180 days. Since coverage is temporary, these policies generally terminate at the end of the coverage period. You may be able to reapply for coverage, depending on the insurer, but any condition for which you filed a claim may be considered a preexisting condition and excluded during the next coverage period. But these policies are flexible, giving you the option to choose your doctor and hospital, so there are no out-of-network penalties as there are in most group health plans.

Who can benefit from short-term insurance?

• Recent college graduates who want health coverage while they're job hunting or waiting for new employee benefits to begin.
• Individuals who are temporarily out of work and are looking for a more affordable alternative to COBRA coverage.
• Anyone who loses dependent status under his or her parents' health coverage. If you reach 18 and are not a full-time student, you will most likely lose coverage under your parents' policy.
• Anyone who is temporarily without coverage for some other reason.

Short-term medical coverage is attractive because it is easier to get than traditional health coverage and there is no waiting period. The premiums are lower, but the deductibles (which you choose) range from $250 to $2,500. Once the deductible has been met, the insurer pays 80% of the first $5,000 of claims above the deductible and you pay 20%. The plan then pays 100% of remaining covered expenses, up to some maximum benefit.

Many plans give you the option of either paying a lump sum for a designated period of coverage or paying a monthly premium. The latter option is useful if you know that you will only need coverage for a specific period of time.

Although short-term coverage is considered creditable coverage under HIPAA, the plans themselves are exempt from HIPAA's requirements. This means that they do not have to guarantee renewability or issue or waive the preexisting condition exclusion for eligible individuals.

Many trade and professional associations, such as the American Chemical Society, offer their members group health coverage. Or, you may be able to secure coverage as a member of your college or university's alumni association. GradMed is one such service, and about 260 institutions offer new graduates and alumni short-term coverage through this service.

AN ARRAY of state laws may supersede federal law. Your state insurance commissioner will have information on the laws that apply to your state. For example:

• Although no federal law requires health plans to offer specific types of benefits, some state laws do mandate certain types of coverage, such as maternity care.
• COBRA applies to companies with 20 or more employees; however, most states have what are called "mini-COBRA" plans that cover people who work in companies with fewer than 20 employees.
• Some states also require "guaranteed issue," which means that individual health insurers must offer everyone a plan, regardless of current or previous health problems.

So, if your employment status changes, there are resources to help you maintain health care coverage for you and your family. The key is to stay informed about your benefits. For example, Rohm and Haas is actively working to make its employees better consumers by communicating frequently with them about their benefits and by educating them about developments in the health care industry and their implications for employees.

If you decide to pursue individual coverage, you really need to do your homework. "There may be a change in the benefit design, so it's important to compare the coverage offered by each of the options being evaluated," says Mazer of Rohm and Haas. "There could be a difference in the copayment or deductible versus what they have now or there may be some out-of-pocket maximums."

The last thing you want is to go without any health insurance. Gambling on your continued good health is the most expensive option of all.

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INTRODUCTION - EMPLOYMENT OUTLOOK 2003

DEMAND

The year ahead is shaping up as even tougher than this one for those seeking employment in most fields of chemistry. Jobs are available, but the hunt is likely to be long and arduous.

WANTED
Scientists Needed To Help Secure The Homeland

BEYOND GRAD SCHOOL
When Jobs Are Scarce, Some Seek Postdocs

SALARIES & EMPLOYMENT

The unemployment rate for chemists climbed to 3.3% in 2002, the highest rate measured in more than 30 years' worth of ACS surveys. But for chemists already in the workforce, the salary situation remained quite strong.

WORKFORCE
Societies Look At Changing The Face Of Science & Engineering

THE INTERVIEW

Seasoned chemical industry recruiters describe what works and what does not, plus a list of tips for the interviewee.

HEALTH INSURANCE

What employees need to know about ensuring continued coverage when their employment status changes.

CAREER-PLANNING RESOURCES

A guide to sources of job and career information well suited to chemical scientists seeking industrial, academic, or government positions or looking to change careers. Some of the most comprehensive resources can be found at the American Chemical Society.

Chemical & Engineering News
Copyright © 2002 American Chemical Society