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How to get and keep your health covered

Times Staff Writer

Gov. Arnold Schwarzenegger wants everyone to carry health coverage, the way drivers must have automobile insurance. But for people who don’t get health benefits on the job, that’s easier said than done -- especially if you are not young and invincible. ¶ Just ask Joe McGrath. The 44-year-old self-employed recording engineer recently discovered that he couldn’t buy commercially available individual insurance at any price. ¶ The Redondo Beach man said he was blackballed by two major insurers. In letters, they told him he was uninsurable because he takes medication to control his cholesterol and once got a borderline high blood pressure reading. ¶ McGrath’s physician sent a letter touting his fitness, but the insurers didn’t budge. ¶ “I feel like I am being punished for being self-employed,” McGrath said. “I just wanted to be covered, and I was willing to pay. And I was still rejected.”

Of the 45 million uninsured Americans, including 6.7 million Californians, there are no good estimates of how many are uninsurable because of preexisting conditions. But millions of Americans who work for themselves, including physicians, lawyers, plumbers and artists, have to buy it on their own -- if they can find an insurer willing to take them on.

In California, that is difficult for people with common medical conditions or on widely prescribed medications. The uninsurable are considered enough of a problem that lawmakers in Washington and Sacramento, along with Schwarzenegger, want to compel insurers to sell coverage to individuals regardless of their health.

To many, an insurer mandate is considered only fair if individuals are required to carry coverage.

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A few states require insurers to sell individual coverage regardless of health conditions. But California and most others allow insurers to reject applicants because of current or past conditions.

On the other hand, job-based coverage -- if it is offered at all -- has long been required to be issued regardless of health.

Without such guarantees, obtaining coverage on your own can feel like a board game with more chutes than ladders. But consumers can improve their odds if they know a few simple rules.

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Rule No. 1

When looking for work, consider the sometimes overlooked value of jobs with health coverage.

Job-based coverage is relatively affordable because employers pay the lion’s share of premiums. Also, many people with common medical conditions can not buy insurance on their own.

Job-based coverage is such a precious commodity for people with health conditions, and those supporting a family member with medical problems, that it influences career decisions. The need for coverage can drive entrepreneurs to abandon their own businesses and keep people in dead-end jobs.

“People go through hell and high water to get into employer-based coverage because they know they can’t get coverage in the individual market,” said Anthony Wright, executive director of Health Access California, a group that advocates for expanding access to healthcare.

Yet job-based coverage, though still dominant, is on the wane.

Employers say that they can no longer afford this increasingly expensive perk and that it drives up their costs relative to foreign competitors whose workers are covered by national health plans.

This trend is playing out on a big scale in California, where the number of jobs with health benefits shrank by 678,000 from 2001 to 2005, according to a UCLA survey released in July. Another study reported in July that the level of college graduates getting jobs with health benefits was falling.

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Rule No. 2

Stay insured -- even if you lose your job.

Job-based coverage can be your key to long-term insurability, thanks to the federal Health Insurance Portability and Accountability Act. This 1996 law, also known as HIPAA, limits insurers’ ability to reject applicants with preexisting conditions.

With some exceptions, it requires insurers to sell coverage regardless of medical condition to anyone who has maintained group coverage for 18 months without any breaks of more than 63 days.

Before shopping, consumers must obtain a “certificate of creditable coverage” from their employer.

What that means is that people leaving a job in which they had health insurance can remain eligible for “guarantee issue” coverage so long as they obtain new coverage within 63 days.

One vehicle for obtaining coverage is COBRA. That is the acronym for a federal law that allows people leaving jobs with large employers, and their dependents, to extend health coverage -- at their own expense -- for as long as 18 months.

A state law known as Cal-COBRA can extend this coverage for an additional 18 months.

After McGrath was rejected for individual insurance, the self-employed recording engineer got COBRA coverage through his wife’s former employer.

He was relieved to get coverage after his wife, Marty Jo, quit her job that carried health benefits for the family to raise the couple’s two children.

But McGrath’s coverage wasn’t cheap. His COBRA premium is $575 a month -- almost $100 more than for individual coverage for Marty Jo and the two children.

COBRA coverage tends to be more expensive than individual insurance because, by law, it must be issued regardless of medical condition.

It also is more expensive than job-based coverage because, without an employer’s contribution, the policyholder pays the full cost and an administration fee.

COBRA is not available to people who work for small employers. For them and for people who need coverage after COBRA runs out, HIPAA again can guarantee eligibility for coverage without regard to health.

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Rule No. 3

Be honest.

The individual insurance market can be tough for people with medical conditions. But failing to disclose such conditions to insurers is perilous.

Cancer survivors probably are not surprised to be rejected for individual coverage. Most consumers, however, don’t realize how many common conditions can render them uninsurable in California.

They can include jock itch, varicose veins, acne and breast implants, to name a few, as well as use of a long list of commonly prescribed drugs.

Insurers in the individual market compete vigorously for the youngest and healthiest consumers. They use a lengthy medical history questionnaire to try to screen out everyone else.

It may be tempting to shave a few pounds off your weight, and it can be difficult to recall 20 years of medical history. But it pays to be as thorough and honest as possible -- even if it means getting rejected.

The consequences of even a small omission or honest misstatement can be dire. Your insurer may revoke your coverage, leaving you responsible for the costs of treatment and potentially uninsurable. Each year, hundreds of Californians who’ve submitted big medical bills to insurers find themselves subjected to application investigations. Some even lose coverage as a result.

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Rule No. 4

Pay on time.

If you qualify for individual insurance, be prepared to pay. Premiums for the young and healthy start at $200 a month or less. But rates escalate. A study last year concluded that about half the nation’s uninsured population earned too little to afford individual coverage.

When considering individual coverage, remember that the premium is only part of your total cost.

Including out-of-pocket expenses, the average individual policy in California cost $6,500 last year, according to a study issued in June by Watson Wyatt Worldwide analysts with funding from the California HealthCare Foundation.

Insurers, keenly aware that consumers comparison-shop based on premiums, have kept starter rates low by raising co-pays and deductibles, the study found.

Individual premiums rose only 23% from 2003 to 2006 to an average of $259, but small-group premiums jumped 53% to $382 last year.

So, based on premiums alone, individual coverage looks like a good deal. In fact, the opposite is true, the study said.

A comparison of policies based on the portion of medical expenses paid by the insurer showed that small-group coverage retained its value. Such policies paid about 83% of medical expenses from 2003 to 2006. Individual policies, on the other hand, paid only 55% of medical expenses in 2006, down from 75% three years earlier.

If you need and get individual coverage, be sure to pay your premium on time. A single missed payment is cause for cancellation. Experts recommend paying by automatic withdrawal -- allowing the insurer to take premiums directly from your bank account -- whenever the insurer makes that option available.

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Rule No. 5

Be aware of a last option.

For people who have been turned down by commercial insurers, the state subsidizes a high-risk health insurance pool.

But the Major Risk Medical Insurance Program has many shortcomings. It often has a waiting list. Its benefits are limited to $75,000 a year and enrollees spend as much as one-third of their income on monthly premiums that cost as much as $796.

Following these rules can be difficult, and success is not guaranteed. The health insurance market is complex, confusing and, for many people, beyond their reach. And that’s why healthcare reform is such a hot topic nationwide.

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lisa.girion@latimes.com

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(BEGIN TEXT OF INFOBOX)

Health insurance resources

Enormous amounts of information about health insurance -- including facts about eligibility, access and cost -- are available from employers, individual insurance companies, industry associations, state and federal agencies as well as from consumer groups. Here are a few valuable websites to help your research.

A list of California health plans and information about them can be found at the California Department of Managed Health Care website at www.dmhc.ca.gov and the California Department of Insurance’s website at www.insurance.ca.gov.

Workers have a variety of health insurance rights and benefits under two federal laws: the Health Insurance Portability and Accountability Act and a federal budget law known as COBRA. Check out those laws and how they work at the Department of Labor’s Employee Benefits Security Administration website at www.dol.gov/ebsa.

California’s high-risk insurance pool also may be an option for some consumers. For facts on the program, eligibility requirements and how to apply, go to www.mrmib.ca.gov.

Another good resource is the Foundation for Health Coverage Education, which has a broad selection of information about health insurance and government assistance programs for consumers, including the uninsured. It has a toll-free number, (800) 234-1317, and a website, www.coverageforall.org.

Source: Times research


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