Will COBRA be there when you need it?
No health insurance from First Magnus
By Tim Steller and Christie Smythe
Arizona Daily Star
August 25, 2007
Mortgage-lender First Magnus laid off most of its more than 5,000 workers nationwide last week after abruptly halting its loan business.
An e-mail sent to employees said the Tucson-based mortgage lender canceled its health insurance because, after its bankruptcy filing on Tuesday, it can no longer pay for the plan.
“As a result of this termination, COBRA will not be available to any current or former First Magnus employees,” the e-mail says.
Under the federal law establishing COBRA, many employees who leave a job — voluntarily or not — are eligible to buy the health insurance offered by the employer for up to 18 months.
But the catch for former First Magnus workers is, the employer’s plan must still exist in order for the former employee to buy it.
http://www.azstarnet.com/sn/related/198102.php
Comment:
By Don McCanne, MD
Another incremental improvement in health care coverage was the introduction of the COBRA regulations which allowed an individual to continue to purchase prior employer-sponsored coverage during limited transitional periods of unemployment.
One problem with the program is that many unemployed individuals simply are not able to pay the insurance premium and consequently lose their coverage. Also, when the qualification period ends, the individual might not be ale to meet underwriting standards in the individual market. State-sponsored high risk pools frequently are not an answer because of high costs, waiting lists, poor benefits, and the fact that many states have not even established such pools.
The former employees of First Magnus have now discovered yet another potential problem with COBRA: they are unable to purchase COBRA coverage from a plan that no longer exists because it was terminated.
Haven’t we had enough of these incremental steps to improve health care coverage? All parameters are worse (except children under SCHIP, but that now is also under threat).
It would be so simple to make health program enrollment automatic and permanent for everyone, by establishing our own equitably-funded universal risk pool. What is there about simplicity and equity that we don’t understand?