Continuation of Coverage / HIPPA

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their dependants who lose their health benefits the choice of continuing coverage through the group’s medical, dental, and vision benefits.  COBRA applies to all employer health benefit plans with 20 or more employees, except plans sponsored by the federal government and certain church-related organizations.  The coverage provided by the group health plan may be extended for limited periods of 18 – 36 months under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals will be required to pay the entire insurance premium plus, at the employer’s discretion, a small administrative fee.

COBRA outlines how employees and family members may elect continuation coverage. It also requires employers to provide proper and timely notice to appropriate insureds.  COBRA coverage may terminate early if the former employer stops offering a group health plan altogether.  Visit the U.S. Department of Labor website for more information regarding COBRA.

State Continuation

If the former employee’s COBRA benefits have expired, Texas law requires most group plans to allow former employees and their dependants to continue medical coverage for an additional six months.  If elected, the six month state continuation period begins after any COBRA period ends. 

If the employer does not participate in COBRA, the former employee and their dependants are eligible for nine months of state continuation coverage. State continuation may not terminate until the earliest of the allowed six to nine months of coverage, the date on which the failure to make timely premium payments would terminate coverage, the date the covered person is covered by another similar health care coverage, or the date the former employer  stops offering a group health plan altogether. Note that state continuation of dental and vision coverages are not available under Texas continuation.

Visit the Texas Department of Insurance website for more information regarding state continuation.

HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) provides protection for participants and beneficiaries in group health plans. HIPAA includes protections for coverage under group health plans that limit exclusions for preexisting conditions, prohibits discrimination against employees and dependents based on their health status, and allows a special opportunity to enroll in a new plan to individuals in certain circumstances. HIPAA may also provide a right to purchase individual coverage if no other group health plan coverage is available, and COBRA or other continuation coverage has been exhausted.

Requirements for health privacy and portability of coverage for employees are the primary premises of HIPAA. Sweeping changes in HIPAA laws continue to be a driving force for compliance by employers and health care organizations.

Employers must be aware of the privacy laws under HIPAA for Protected Health Information (PHI) and the federal requirements on releasing, storing, and transmitting PHI.

Visit the U.S. Departments of Labor and Health and Human Services websites for more information regarding portability and HIPAA privacy.

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