Maintaining health insurance while on long-term disability insurance (LTD) benefits can prove extremely difficult. For many people, the greatest administrative challenge comes early in their disability journey. Coordinating LTD and health insurance is essential to prevent a gap in coverage for medical care in the initial period after you leave work. Certain federal regulations protect a window of opportunity in which individuals who lose their employer-sponsored health insurance can limit the LTD impact on medical coverage by finding and enrolling in a new health insurance plan. Particularly for people whose employers maintained all-inclusive group plans, disentangling long-term disability and health insurance can sometimes become a frustrating process, so do not hesitate to reach out to disability advocates and others in your support network as you navigate the steps.
What Happens to Your Health Insurance During Long-Term Disability?
What the LTD impact on medical coverage looks like in your particular situation will depend to some extent on how you leave the workforce. A majority of long-term disability policies follow the “any occupation” standard in assessing an individual’s disability, meaning they only provide benefits if a person is unable to work in any position. People who take long-term disability under these policies will obviously lose any employer-sponsored health insurance while on long-term disability.
Working on Long-Term Disability: Health Insurance Employee Benefits
Some “own occupation” policies that provide benefits if you are unable to continue working in your chosen profession may have looser restrictions around the kind and amount of work you can do while receiving LTD benefits, but in most instances this would still mean part-time work, especially for individuals whose condition limits not just the kind of tasks they can undertake, but the amount of time they can devote to those activities in a day or a week. Part-time jobs usually do not provide benefits, so for most people on employer-sponsored health insurance, the LTD impact on medical coverage is likely to be substantial.
LTD Impact on Medical Coverage: Personal and Marketplace Insurance Policies
If you have personal health insurance coverage that you selected individually, either directly from an insurance company that is active in your state or through the national Health Insurance Marketplace created under the Affordable Care Act (ACA), you may be able to keep your health insurance while on long-term disability, or you may want to look for possible cost-saving options since going on disability will usually mean a change in your household income. Even if you do face challenges in coordinating LTD and health insurance, you may have options for ensuring continuity of care.
Coordinating LTD and Health Insurance Transitions: HIPAA Rules for Pre-Existing Conditions
The patient privacy protections in Title II of the Health Insurance Portability and Accountability Act (HIPAA) tend to get the highest volume of public commentary. They are indeed important, and the security and privacy of an individual’s personal health information should never be taken lightly. However, the Title I provisions establishing standards for health insurance portability can have an extraordinary effect on the course of an individual’s life, even though these protections may enter into public conversations less often and rarely draw attention to themselves through the updates to disclosure forms many people have to go through for Title II requirements as they attend medical appointments throughout the year.
Losing Health Insurance While on Long-Term Disability: HIPAA and Employer-Sponsored Health Insurance
The “portability” protections established by HIPAA work somewhat differently from the portability options some LTD policies offer for individuals who are switching jobs. Under HIPAA, health insurance benefits themselves are not extended or transferred. If you lose your employer-sponsored health insurance because you leave your job, and you need medical care while you are uninsured, then your medical care will not be covered by any insurance plan. Whatever costs are associated with that care will be “out of pocket,” meaning the patient will be responsible for paying the healthcare provider directly for their services.
What Is “Portability” Under HIPAA?
The protection HIPAA’s Title I provisions offer individuals who lose health insurance previously held under an employer-sponsored plan related to the terms most health insurance policies have for excluding any treatments related to pre-existing conditions from coverage. Under HIPAA, if a person who has lost health insurance coverage previously held under an employee benefit plan is able to find and enroll in a new health insurance policy within a set period of time, then that person’s new insurance provider will not be able to deny coverage on the basis of pre-existing conditions as long as the conditions otherwise meet the criteria for benefits under the new policy. People who leave their jobs due to disability are essentially guaranteed to have pre-existing conditions, so HIPAA portability protections may play a defining role in shaping the LTD impact on medical coverage for these patients.
Coordinating LTD and Health Insurance Transitions: COBRA Continuation of Coverage
The Consolidated Omnibus Budget Reconciliation Act (COBRA) established a different set of consumer health insurance protections. These protections are not a part of current HIPAA regulations, but many people use the provisions of these two laws in combination because the options for extending health insurance coverage mandated under COBRA can make it much easier to take advantage of the Title I portability provisions outlined in HIPAA.
Coordinating LTD and Health Insurance: Extending Health Insurance After You Leave Work
Under COBRA, whenever an individual loses employer-sponsored health insurance due to a “qualifying event,” such as leaving the employer or losing their household connection to the person through whose employer they previously had access to a health insurance policy, the health insurance company is required to offer the individual losing coverage the option to extend his or her health insurance under the same plan, for a limited period of time. This structure helps to provide personal health care stability by ensuring that the benefits and policy terms can remain unchanged, for the duration of the extension period.
LTD Impact on Medical Coverage: The High Cost of COBRA
Usually, the maximum duration of a COBRA continuation of coverage policy is 18 months, but many people aim to discontinue their COBRA policy extensions as soon as they are able to find an alternative. The downside of COBRA continuation of benefits is that the person formerly covered under an employer-sponsored plan becomes immediately responsible for the full cost of the premiums, in addition to which health insurance companies are permitted to charge an administrative fee of up to two percent. In general, it is recommended to begin your search for an alternative health insurance policy as soon as possible, potentially even before you file your application for long-term disability benefits.
Maintaining Health Insurance While on Long-Term Disability
Although the cost of the premiums for health insurance policies purchased under COBRA’s continuation of coverage provisions can be substantial, paying them can often make it much more feasible to avoid creating a gap in coverage that could have devastating effects on an individual’s future access to health care. Particularly for anyone navigating the intersection of long-term disability and health insurance, avoiding that gap and the exclusion of pre-existing conditions, including the condition responsible for their disability, can easily become one of the most important considerations in the first months after leaving the workforce.
Coordinating LTD and Health Insurance: Preparing for LTD Impact on Medical Coverage
If your long-term disability policy is part of a benefits package offered through your employer that also includes health insurance, then the health insurance component will not automatically come with you, even if you leave work on the LTD plan sponsored by your employer. However, you may be able to mitigate the LTD impact on medical coverage by purchasing a continuation of coverage policy under COBRA guidelines. Coordinating LTD and health insurance through a COBRA continuation policy keeps your policy terms, benefits, and scope of coverage essentially the same for a period of time, usually several months. While expensive, this extension of coverage can help you to prevent a gap in health insurance while on long-term disability that could make it more difficult to get approved for a new health insurance policy and even more difficult for you to get coverage for pre-existing conditions. Planning your transition to long-term disability and health insurance enrollment carefully can help you take advantage of HIPAA’s portability protections to avoid this gap.
