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Counting on COBRA? Check the rules
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"Under COBRA, you have the right to wait for the full 60-day election period and the 45-day premium payment period and see if you want to elect COBRA," says Hamburger.

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But tread carefully, because there are a lot of nuances here.

"During that period you technically aren't really covered until you elect and pay for COBRA coverage," Hamburger says.

"If you do elect, then that election is retroactive to the loss of coverage date," he says.

"This would mean that you don't have a 63-day break in coverage -- assuming you keep COBRA in effect for the proper period, and your prior coverage plus your COBRA coverage will be applied as creditable coverage by the new company plan, assuming you get another job, or other coverage."

Those are hopeful assumptions. Let's say you don't get a new job, don't buy other insurance and don't continue your coverage through COBRA, and 63 days pass.

"If you do not elect at the end of the 60-day COBRA election period, then you will lose the right to have the pre-existing condition exclusion reduced by your period of prior coverage, because you will have a HIPAA gap in coverage of 63 days or more," Hamburger says.

"So to balance these two laws, HIPAA and COBRA, the individual has to carefully determine whether the pre-existing condition exclusion is an issue and the timing of when the other coverage is obtained."

If you think you'll save a few hundred dollars by not paying for COBRA coverage, you might lose big money by having your pre-existing conditions getting excluded from your new employer's plan.

Other options
You will sometimes have other insurance options, and some may be cheaper than COBRA, depending on your personal health situation. It pays to shop around.

"A lot of people elect out of COBRA because of cost, so we always offer them to go with an individual plan," says Kathy Hulsey of Healthcare Consultants in Houston.

"So if someone is giving two weeks' notice and they know they're going to get insurance in 60 days, there are individual temporary policies, though if they have certain medical conditions they may not be eligible."

If you're faced with pricey COBRA emergency care or zilch, you may be better paying up, though insurance brokers often recommend fuller coverage.

"I guess it would be better to have emergency benefits rather than nothing," says Hulsey.

Your state, and your COBRA
When it comes to COBRA, the state you come from matters a lot.

Every state has its own insurance regulations, and some mandate more generous insurance than others.

In California, Hamburger says, COBRA lasts for 36 months -- double the federal amount.

Interestingly, though COBRA is a federal law, the kind of coverage you get has a lot to do with which state you last worked in. That's because what insurers have to cover is controlled by states.

"The federal government by law can't regulate insurance companies, but a state can," says Hamburger. "The states regulate insurance products delivered in their state."

Every state's situation is different, so it pays to ask, and it often pays to ask your state officials to clarify your state's specific laws.

Who to ask for help
If your insurer won't help you out, Hamburger says you have two other possible avenues for assistance: your state's insurance board and the U.S. Department of Labor.

Whatever you do, make the calls. Information can save you a lot of money, and unless you're used to reading insurance lingo, some professional help can be a huge plus.

All you can do is inform yourself, and if there's a plan offered to active employees that would work better in your new location, make sure you have the chance to take it.

Bankrate.com's corrections policy -- Posted: June 30, 2006
 
 
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