One of our commenters took issue with us regarding what happens when a group health plan is disbanded (that is, goes away altogether). Rather than address this in the comments section, it seems more helpful to explain the ramifications as a separate post.
In my reply to the commenter, I said that if the group was cancelled, “COBRA (and/or state-mandated continuance) is not available.”
I should probably clarify that little nugget: "and/or state-mandated continuance."
In Ohio, we have a state law which we lovingly call "mini COBRA." In certain circumstances, an (ex-)employee may elect to continue their group cover for an additional six months. Obviously, if there is no longer a group plan in place, this option is not available; it was to this benefit that I referred.
Also under Ohio law (YMMV), most group plans must offer a "conversion" plan with no exclusion for pre-existing conditions. Unfortunately, these can be quite expensive, and offer minimal coverage. Still, they may well be “better than nothing.”
There is also a mechanism available through HIPAA (which, BTW, is not the same as “Hippa,” which is a Greek word referring to “Eve”) which allows an uninsurable person to access a state-mandated benefit plan. This, like the conversion plan, would cover pre-existing conditions, but with correspondingly higher premiums.
Interestingly, we covered this ground back in March, and I recommend that post to those interested in a case study of this method.
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