When it comes time to decide whether to file a claim for long term disability, you might have questions about how your health insurance will be affected.
The continuance of your health insurance, and the timing of the end of your health coverage, depends on the internal policies of your employer, the Family and Medical Leave Act (FMLA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Social Security Act, and state law.
All of these laws and policies interact with each other to outline how long medical leave can last and how long your medical coverage will last. While on medical leave under the internal policy of your employer, the Family and Medical Leave Act, or a state disability leave law, your employer must continue your health insurance.
The Internal Policies of Your Employer
The very first place to look to determine how long your medical coverage will continue is in your employer’s policies.
Your employer almost certainly has a policy outlining what happens when employees go on medical leave. Review your employer's policies and your employee handbook. A timeline of events during a medical leave will be outlined in those locations. For some large employers, you will be able to remain on your employer's health plan for up to two years of medical leave. Other employers provide only 12 weeks of medical leave.
Absent a non-discriminatory reason to depart from its internal policy, your employer will have to follow their own rules regarding the continuation of your medical coverage.
The Family and Medical Leave Act
The Family and Medical Leave Act (FMLA) may also protect your health insurance coverage while you are on medical leave.
The FMLA covers employers
In the private-sector who employ 50 or more employees,
Who are public agencies (including Federal, State, and local government employers, regardless of the number of employees), and
Who are local educational agencies (including public school boards, public elementary and secondary schools, and private elementary and secondary schools, regardless of the number of employees).
FMLA covers employees of a covered employer who have worked for at least 12 months and have at least 1,250 hours of service with the employer during the 12 months before their FMLA leave starts.
Under the FMLA, employees are entitled to request unpaid leave for a period of up to 12 weeks due to medical issues (such as a condition causing long term disability) or due to caregiving needs. During this time, employers must continue offering health coverage under the same terms as if you were still working. However, some employers may require that you pay your portion of the premium during FMLA leave and you might also lose any employer contribution towards your premium.
Typically, even employers that are not covered by the FMLA provide for at least 12 weeks of medical leave.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) covers private-sector employers with at least 20 employees. COBRA also applies to plans sponsored by state and local governments. It does not apply to plans sponsored by the federal government or by churches and certain church-related organizations.
COBRA kicks in once you have been terminated from your job. COBRA allows former employees to continue health coverage for up to 18 months in some cases. This could be helpful if your long term disability lasts longer than 12 weeks, or if you have exhausted FMLA. The employer is required to provide the former employee and their dependents with an election notice that outlines the rights to continue health coverage.
Once you elect COBRA, it is important to make sure you pay your premiums on time, as failure to do so can result in a loss of health coverage.
Premiums for COBRA continuation coverage cannot exceed 102 percent of the cost to the plan for similarly situated individuals. In practice, this means that your premium for COBRA continuation may be up to 2% more than the premiums you and your employer were collectively paying for the coverage.
Because COBRA can be fairly expensive, we advise our clients to check their local health insurance marketplace. Many times health coverage through the marketplace will be equivalent to your prior coverage and offered at a price similar to or lower than COBRA. The loss of health insurance is a “qualifying life event” that will allow you to enroll in new health insurance coverage outside of the open enrollment period.
Social Security Act
If your Long Term Disability Plan was provided by your employer, your Long Term Disability Plan will very likely require you to apply for Social Security Disability benefits. This is because your long term disability insurer will reduce your LTD benefits by the amount you receive from the Social Security Administration. This is called an offset.
What does this mean for your health coverage? Once you receive disability benefits through the Social Security Administration for 24 months, you will be required to enroll in Medicare, regardless of your age. The premiums for Medicare will automatically be deducted from your Social Security Disability payment each month.
Your health insurance may also be protected by state law. Many states have long term disability insurance laws that require employers to provide health coverage for employees who are receiving long term disability benefits. These laws vary depending on the state, so it is important to review your state’s specific long term disability insurance requirements in order to determine what type of health coverage you may be entitled to.
In addition, some state laws provide that your health insurance can be extended beyond the 18