Tuesday, December 20, 2011

Maintaining Health Insurance During a Career Break. Who Knew There Were So Many Considerations!

Although we feel our travel insurance would be adequate while traveling, what happens if one of us needs medical attention and we are sent back to the States?  Unfortunately, travel insurance typically ends as soon as you land on U.S. soil.  A more likely scenario is upon our return where there is a vulnerable period where the travel insurance will no longer protect us, yet we may not be employed in order to qualify for employer-provided-healthcare.  Even if we did find employment, there may be a pre-existing condition clause with a waiting period on that policy.  Either way, we would be uninsured when we return to our “real” lives – something that makes us very nervous. 

One way to avoid being uninsured when we return is to maintain continuous coverage in the States during our absence.  Sounds easy enough, but apparently it’s very complicated.  A couple of excellent blogs have helped highlight some of the complexities with health insurance in the States.  Both blogs are available through the Meet, Plan, Go website.  They are both, a “must read”:  TravelHealth Insurance Providing Creditable Coverage and HealthInsurance for American Travelers.   Frankly, we hadn’t even thought about needing to maintain health insurance in the States while we travel, but after reading these blogs, we definitely think that is the way to go. 

Let us break it down for you.

 COBRA: If you have read these articles, you would know that we do not qualify for COBRA because we are voluntarily leaving our jobs instead of getting laid off.   

CREDITABLE COVERAGE AND PRE-EXISTING CONDITIONS: In the articles, you would also learn the difference between creditable coverage versus non-creditable coverage, and the problems caused by that pesky pre-existing condition clause. 

Basically, creditable coverage means that you have had “credible” health insurance coverage (most group plans, Medicare, Medicaid, state health plans, some individual health insurance, etc.), which may positively influence the pre-existing condition exclusion period in your new health plan, as long as there was no lapse between creditable coverages  past 63 days.  In other words, even if we are lucky enough to get a job with a group health plan as soon as we return; the plan may have a pre-existing condition exclusion for up to 18 months.  Anything that we have sought treatment or consultation within 6 months prior to applying for the new health insurance is considered a pre-existing condition and may be excluded under the new health plan for a period of time.   However, this exclusion may be waived or shortened by proof of having prior creditable coverage within the last 63 days.

You ask, how easy or difficult is it to obtain creditable coverage, privately or individually?   Reading the blogs, it seems like a difficult process.  For starters, there aren’t a lot of companies that underwrite individual, creditable coverage.  Even if we find one, we may not be eligible.  In the Health Insurance for Americans, they explain how they had to change their residence to New Jersey – in order to take advantage of some of the consumer-friendly insurance laws.   So, we will continue to do some research and report back!

NON-CREDITABLE COVERAGE: Travel insurance is non-creditable coverage.  Many short-term health insurances are non-creditable.  The eligibility process is less rigorous, and it costs less than creditable coverage.  Earlier, we mentioned that once we hit U.S. soil, travel insurance coverage typically ends.  Therefore, it may be prudent to maintain some kind of short-term health policy in the U.S., “just in case” we need coverage upon our return.  Although it may help with medical bills initially, it will do nothing to help with the pre-existing condition exclusion clause, as mentioned above.  In addition, the short-term policies we have reviewed provide insurance for up to 6 months, at which point, they can opt to non-renew.  Since we are gone for over 6 months, we risk non-renewal; thereby, being left uninsured anyway. 

·         MAINTAIN EMPLOYMENT/SECURE LEAVE OF ABSENCE:  Many people seek certain employment for its benefits.  This is no different.  One huge benefit of securing a leave of absence instead of having to terminate employment, is the ability to maintain benefits during our absence.  The group health plan is creditable, and because there will be no lapse in coverage, we have nothing to worry about, except to pay the premiums during our absence. 

Bottom line: there is a lot to think about.  Should we seek expensive, individual, creditable coverage during our absence?  Will we even qualify?  This will minimize the risk of being excluded for pre-existing conditions upon our return.  Or, should we maintain a short-term, less expensive, non-creditable U.S. policy instead?  At least we will be insured, but risk non-renewal when we need it most, and does not help with the pre-existing condition clause.  The riskiest option is to simply go with travel insurance only.  Or, could we secure a leave-of-absence, where creditable health insurance coverage can be maintained?  Next steps: research the options, including cost, and report back!