Gap in coverage

HRQ

This question came to me from a co-worker about her sister-in-law;

"Susie" anticipates being discharged this week, she thinks because she reported her company's questionable pay practices to the DOL. (This is another issue entirely!) If she loses her job, she'll lose her insurance benefits. (she knows COBRA will be an option)

Susie's husband asked his employer about adding Susie to his insurance as a dependent, due to qualifying event. Hubby's employer says Susie can be added, but there will be a 30 day gap in her coverage.

It is my understanding that when a qualifying event occurs, the new coverage must take effect immediately after the old coverage cancels, whether it's same day or 1st of the month following, whatever the contract indicates.

Is this type of requirement tied to what is in your contract with the insurance company, or is there a law that applies to this situation? Can the employer force Susie to suffer a 30 day gap in coverage?

Pearce

There is no law that requires a plan to pick up coverage "immediately" after other coverage is lost. The law you are probably referring to is the HIPAA special enrollment rules which say that when coverage is lost (termination of employment would be an example) and the employee requests coverage within 30 days of the loss the person who lost coverage may be added to the plan on the first of the month following the request. If Susie loses coverage on 8/31 and the request is made on 9/3 then the coverage is effective on 10/1.

HRQ

This did clear things up for me.

A few months ago, I'd spoken to my benefits broker regarding a similar event with an employee (her daughter was dropped off dad's insurance and employee needed to add daughter to employee's own coverage) and came away with the understanding that coverage had to be effective the first of the month following the loss of coverage.

Thanks, as always!

NaeNae55

Pearce is right. But remember, Susie has 60 days to elect COBRA. By the time her new insurance kicks in, she will know if she needs to elect COBRA and pay for one month of coverage, or just let it go.

crawfod

In my experience the key is how your health insurance contract reads as to when eligibility becomes effective. BCBS typically offers plans for "1st Billing Date" and "Give and Take". Eligibility can vary depending upon which option you take. Best to check with your carrier first before allowing new members to be added.

Mentel

Suzie should look at when her coverage ends at the current employer. Many plans cover you under the active employee rate til the end of the termination month. If she terminates on September 5 for example, she would have employee rate coverage until the last day of September. COBRA would not kick in until the first of October. If she advises her husband's employer on September 5 about the qualifying event, she should be on by October 1.