Maintaining The Net: How to Switch Insurance Plans Smoothly

Have you recently lost your job? Are you thinking of quitting to start your own thing? If that’s you, worries about health coverage may be foremost in your mind. If you’ve been getting coverage from your employer, you’ll need to figure out how to how to make the transition smoothly. Unless you are going between plans offered by your employer, it takes some coordination to make sure your health care will be uninterrupted and you won’t end up with a gap in coverage—or worse, losing coverage entirely.

First, the top three things to keep in mind (no matter what type of plan you’re changing to):

• Be aware of dates.  Many transitions have limited enrollment windows or periods that coverage is available. Missing a date could mean losing coverage. Check with your company’s HR department, or speak directly with your insurance provider to confirm the applicable dates.
• Get your Certificate of Creditable Coverage. This document can be your ticket to getting coverage right away for pre-existing conditions; without it, new insurers may balk at covering pre-existing conditions. It should be sent to you when you stop an insurance plan. Keep it safe.
• Know your options. COBRA, employer plans, individual plans, and short term, temporary plans can all have very different rules. Don’t just assume that insurance is insurance.

 If you are switching from an employer plan to COBRA:

This can be the smoothest of transitions because you are essentially keeping the same plan you’ve always had—but now, you are paying the full cost (both your share and your former employer’s). You have 63 days to complete the paperwork to enroll in COBRA from the time you are first notified that you are eligible. Once you have enrolled, you have 45 days to pay the premium (directly to your former employer–not the health plan). You will probably receive new insurance cards, but your coverage should be the same. Pre-existing conditions will still be covered. You can usually keep your COBRA coverage for 18 months (sometimes 36 depending on how you qualified for COBRA in the first place). After that, it’s time to start shopping for something new.

If you are switching from an employer plan to a temporary or short-term plan:

Temporary plans are often marketed as more affordable alternatives to COBRA. Before you choose a temporary plan, be sure you understand the benefits and limitations. Temporary or short-term plans offer coverage for anywhere from 30 days to 1 year. After this length of time, there is no guarantee the plan will extend your coverage—these plans are not required to renew coverage the way that full medical insurance must. They are also not required to cover pre-existing conditions and often don’t cover routine, preventive care–only emergencies and catastrophic care. The plus side? Temporary health plans can usually start immediately (as soon as you pay) and the application is shorter and simpler, so the switch can be easier to coordinate.

If you are switching from COBRA to a private individual plan:

If your COBRA benefits run out, you have a special right to buy an individual health plan without detailing your pre-existing conditions. However, you do not have this right if you voluntarily decide to leave COBRA or just stop paying your premiums. Translation: there’s no guarantee the new plan you want will take you, so make sure you are covered before cancelling your COBRA.

When your COBRA plan ends, you should receive a “Certificate of Creditable Coverage” from them. Keep this paper as proof you had prior health insurance coverage, which you may need to show your new plan for any pre-existing conditions to be covered (see more below).

If you are switching from one private plan to another.

Do your research and make sure the new plan will work for you. Apply for the new plan and make sure you have been approved before you do anything with your current plan. Your new health plan may require a “Certificate of Creditable Coverage” which is a document that shows how long you have had continuous health insurance coverage. If you have had a “significant break in coverage” before applying (generally 60 days or more), the insurance company has the right to deny coverage of any pre-existing conditions for a waiting period (usually six to twelve months). If you know you will be canceling your plan, you can request the Certificate of Creditable Coverage ahead of time. Then, you’ll need to line up the dates that one plan ends and the other begins (such as the first of the month). As soon as you receive your new insurance cards and have confirmed the dates, you can cancel your current plan.

Tomer Shoval is the CEO and Co-Founder of Simplee, a free online personal health care expense management tool. Connect with him on twitter, facebook or email.