By Mark Scherzer, Esq. (Law Office of Mark Scherzer)
If you are facing a recent or imminent layoff because of the economic impact of the coronavirus (Covid-19) pandemic, you may be wondering whether it is possible to keep some or all of your existing company-sponsored employee benefits (such as your health plan, your group life insurance coverage, or your long-term disability benefits). Here is a brief summary of some of the options you may have:
- Disability Coverage: It may be important for you to keep your disability coverage in place to provide protection while you bridge from one employer to another (where you will hopefully transition to disability coverage with the new employer. This may be especially important if you have a long-standing health condition that may at some point become disabling. Some group long-term disability policies include “conversion rights” or “portability,” which allow you to keep a limited amount of long term disability coverage after you leave employment by paying for it directly. If you want to have coverage after your job loss that pays more than you would receive from Social Security disability payments alone for any potential disability and can afford the premiums, this could be a smart purchase if you lose your job.
- Health Insurance Coverage and COBRA: Of course, long-term disability coverage is not the only important benefit you might wish to consider taking with you when you leave employment. Health insurance may be particularly critical to you in gaining access to quality medical care. If you lose group coverage you will have a 30 day special enrollment period to buy individual coverage in the “exchanges” various states and the federal government have set up for that purpose. In New York that exchange is called the New York State of Health. If your income has been reduced or eliminated because of your job loss, generous subsidies may be available to you in the exchange to purchase coverage. If you have resources to pay for coverage, however, you may have even better opportunities to stay on your group plan, which may have better provider networks and rights to go out of network for care. Under the federal law called COBRA one can continue on many group health insurance plans (those covering groups that typically employ 20 or more people) for up to 18 months by paying the entire premium for that coverage plus a 2% administrative surcharge. The coverage may be extended up to 36 months when certain family events (such as divorce, or death of the primary covered person) occur. If an employee is approved for Social Security disability during the initial 18 month initial COBRA period, it is possible to extend COBRA coverage up to 29 months, or until Medicare coverage begins, if notice of the Social Security disability award is provided to the COBRA administrator prior to the expiration of the 18-month initial COBRA period. Unfortunately, there is a 50% surcharge on the premium for this extended coverage for disabled people. Even if you are covered in a group of fewer than 20 employees, New York law mandates that you be given the opportunity to pay to keep coverage for up to 36 months at the full premium cost. You will have limited election periods to decide whether to take COBRA or New York continuation.
- What if my employer did not provide insurance before I left my job, or I was simply unemployed and uninsured? Even if your lack of health insurance is unrelated to loss of your job, the New York State Department of Health — as a result of the coronavirus pandemic — has instituted a special open enrollment period to allow anyone to enroll up until April 15, 2020. Several other states have also instituted similar open enrollment periods, and the federal government is reportedly also considering instituting similar open enrollment period for states in which the federal government operates the exchange.
- Group Life Insurance Coverage: Under New York law, a group life insurance policy must provide you with the right to convert group coverage to individual coverage, provided you make the election within 30 days of when your group eligibility ends. Similar rights exist in other states. A further discussion of Group Life Conversion rights can be found here.
Because each type of coverage has a short election period after you stop working, you should seek advice quickly (and try to gather copies of your group benefit plan documents) if your job is terminated and you wish to keep your health, life or disability insurance coverage. If you want legal assistance in assessing your rights to coverage when your employment ends, we can help. For health insurance, you can also obtain free help at Community Health Advocates.
Mark Scherzer is a New York health, life and disability claim lawyer with nearly 40 years’ experience handling claims arising under employer-sponsored short and long term disability plans governed by ERISA (the Employee Retirement Income Security Act).