How does health insurance work while on disability?
July 15, 2011 8:13 AM   Subscribe

If someone goes on disability, do they have to go on COBRA or do they keep their company insurance? My uncle was diagnosed with Stage 4 liver cancer yesterday. I am trying to do research about how health insurance works when one is severely ill.

Hi everyone,

I’m asking a question for a family member, so hopefully I can express their question in a way that makes sense. My uncle (dad’s brother) was just diagnosed with Stage 4 liver cancer yesterday. He is 52, with 3 kids, and this is obviously a huge shock for the family.

My father is devastated, but in keeping with his personality, he is trying to research and determine the best plan of action for his brother. He is currently out of the country, and called me this morning to ask me to do some research for him regarding health insurance when one is severely ill/ disabled.

Basically, the question is: If someone goes on disability at work, do they have to go on COBRA or do they keep their company insurance? My uncle is already worried about the fact that he will be pulling in 65% of his salary, and wants to know if he will at least keep his company medical insurance. My dad seems to think there are law regarding these situations, but we are all pretty uneducated about this. My uncle works for a small company, and their HR person couldn’t answer any of his questions. My father has been calling his company’s HR department, but can’t get ahold of anyone. Maybe this varies depending on the company? If so, I guess he’ll have to get his HR person to actually figure it out.

If anyone has any insight or advice on how this sort of thing works, I would be very grateful. Any other information about the business end of very serious illness would be appreciated.

Thanks so much.
posted by afton to Health & Fitness (14 answers total) 1 user marked this as a favorite
I worked somewhere with ST and LT disability when I was pregnant, and when I went on ST after I had the baby I was still covered by the normal insurance plan, not COBRA. I believe COBRA only kicks in when you leave your job completely.
posted by miss tea at 8:21 AM on July 15, 2011

Also, this link should be helpful.
posted by miss tea at 8:23 AM on July 15, 2011

If it helps at all, COBRA is usually the same coverage as the "company insurance" that the person originally had. The difference is that when you're employed the employer typically pays some percentage of the monthly premiums so the cost to the employee is lower; when you go on COBRA you usually pay the whole premium yourself. You're still in the employer's "group" with the insurance company, on the same plan. So: COBRA = same coverage, higher monthly premium.

Unfortunately I don't know for this situation whether your uncle would need COBRA or not. Good luck to your whole family through this.
posted by vytae at 8:31 AM on July 15, 2011

This is best answered, and then independently confirmed, by the HR department at your uncle's place on employment. It really varies depending on the companies policies/provisions for short/long term disability and health benefits. I do believe COBRA is only available after termination of other benefits. I also think (note think not sure) that depending on his TX and recovery he might become eligible for Medicare/SSDI if he is unable to return to work. I hope for him and the family the best possible outcome and prognosis
posted by rmhsinc at 8:32 AM on July 15, 2011 [1 favorite]

I'm not sure of the answer in your relative's specific problem, but it might be useful to keep in mind that COBRA is a government-required law saying when a health insurance company has to keep someone on the plan after they leave their job. In contrast, a disability plan is an extra kind of insurance meant to provide wage replacement, privately provided through the company, usually.

And to make matters more complicated, "going on disability" can mean many different things simultaneously -- it can refer to getting approved by the disability insurance plan, or it can mean some kind of leave status at the company, or it can mean getting social security disability. You need to figure out what's going on on all of those levels.

So you need to look at them separately -- what the company is REQUIRED to do under COBRA, and what the terms of any disability plan are, and what the meaning of "going on disability" is here (e.g., is he effectively leaving his job?) The meaning of "going on disability" with respect to his job status will help you figure out where COBRA comes in.

I would recommend you grab a lawyer for a few hours to help you figure this out.
posted by yarly at 8:39 AM on July 15, 2011

I'm sorry to hear about your uncle's diagnosis.

I had to go on long-term disability from work. I was still considered an employee, just on leave, so I still had my regular benefits. He's still being paid by his company (at the disability rate of 65% of his salary) so he's still an employee. He will have the same health insurance.

COBRA kicks in after someone is no longer an employee. If this were to happen, HR would send him a letter and information on how to sign up for COBRA. As someone else said, it's the same insurance that the company had, but he would have to pay 102% (at least that's what it was when I did it) of the premium.

I'm really surprised that no one in HR can answer these questions (if it's your uncle asking them. If it's you or your dad, they may just have a policy they can't talk to anyone but the employee about benefits).
posted by la petite marie at 8:54 AM on July 15, 2011 [1 favorite]

I don't think you understand what you mean by "going on disability." The term usually refers to SSDI, and you haven't indicated that this is what's happening here. It also tends to have little to do with health insurance--except that people on SSDI are also generally eligible for Medicare, which makes your reference to COBRA all the more confusing.

It sounds to me like what's happening here is not that your uncle is "going on disability" but that he is simply taking a medical leave of absence. This probably involves taking FMLA time. And because he'd still be an employee, COBRA wouldn't enter into it, i.e. if he was part of a group health insurance plan, he'd continue to be covered by the plan.

I think what you need to do here, before calling a lawyer, is to have someone from your family lean on your uncle's HR people about the procedures for taking FLMA time. They're the ones that are going to be able to answer these questions, and whether or not they're prepared to do so, it is, in fact, their responsibility. If you start getting answers you don't like, or don't get answers then maybe it's time to lawyer up.
posted by valkyryn at 8:57 AM on July 15, 2011 [1 favorite]

I am not a lawyer, but I believe what you probably need to be researching is your uncle's rights to continuing group health coverage under FMLA. Assuming that your uncle works for a company subject to FMLA--that is, 50 or more employees, or in a state that has laws extending FMLA-like provisions to smaller companies--then it's likely that he is entitled to unpaid leave for an extended period of time to treat his illness. Disability, as has been mentioned above, is insurance that provides a cash benefit if someone has to take leave from work and not the actual entitlement to take an extended leave without losing a job. At least at my job, the way it works is that FMLA and disability run concurrently: the FMLA gives you the right to up to 12 weeks per year of unpaid leave, then the disability insurance kicks in to cover part of your lost wages.

If your uncle is in a workplace subject to FMLA, it looks like he has the right to retain his heatlh benefits at the same premium level as before:
Maintenance of Health Benefits
A covered employer is required to maintain group health insurance coverage, including family coverage, for an employee on FMLA leave on the same terms as if the employee continued to work.

Where appropriate, arrangements will need to be made for employees taking unpaid FMLA leave to pay their share of health insurance premiums. For example, if the group health plan involves co-payments by the employer and the employee, an employee on unpaid FMLA leave must make arrangements to pay his or her normal portion of the insurance premiums to maintain insurance coverage, as must the employer. Such payments may be made under any arrangement voluntarily agreed to by the employer and employee.

An employer's obligation to maintain health benefits under FMLA stops if and when an employee informs the employer of an intent not to return to work at the end of the leave period, or if the employee fails to return to work when the FMLA leave entitlement is exhausted. The employer's obligation also stops if the employee's premium payment is more than 30 days late and the employer has given the employee written notice at least 15 days in advance advising that coverage will cease if payment is not received.

In some circumstances, the employer may recover premiums it paid to maintain health insurance coverage for an employee who fails to return to work from FMLA leave.
Talking to a lawyer is definitely an option but it's probably cheaper and just as effective to call up the Labor Department in the state where your uncle works, or the federal Department of Labor, to find out exactly what rights your uncle is entitled to under FMLA. If the HR person doesn't know how to handle the situation it's especially important to make sure that someone knows what he is legally entitled to in terms of maintaining his insurance so that he can push back if they try to drop him.
posted by iminurmefi at 9:03 AM on July 15, 2011

Nobody here can answer your question. First, as valkyryn suggests, it's not clear what you mean by "disability" -- if you mean company-provided short or long term disability, companies are not legally required to continue to provide health care coverage to employees on such leaves, but many do. The answer will depend on his employer's disability plan language. Your uncle should ask for a copy of the disability and health care plan SPDs (Summary Plan Descriptions), which are legally-required documents designed to succinctly describe benefit plans in easy-to-understand language. Those should answer the question, even if HR can't (which is bizarre).

The FMLA, which provides up to 12 weeks of unpaid leave, is also an option. Under the FMLA the employer must continue to provide health care coverage (although the employee may be required to continue to pay the same contribution or cost-sharing requirements that an active employee must pay). However, you state that the uncle's company is small, so they may not be subject to the FMLA (which requires that the employee work at a worksite within 75 miles of which the employer employs at least 50 people).

There's lots going on here -- we would need more information to give you a definitive answer.
posted by pardonyou? at 9:05 AM on July 15, 2011 [1 favorite]

Valkyryn and pardonyou are correct.

Additionally, there may be a state family and medical leave law if the employer is not subject to FMLA.

Also, because I noticed you marked it as a best answer, be careful in taking anecdotal advice. You have no idea whether la petite marie's company's policies (and which laws they are subject to) are relevant to your uncle's situation.

Finally, this: COBRA kicks in after someone is no longer an employee is not strictly correct. An individual could be on COBRA and still be an employee. COBRA is triggered when an individual loses eligibility for the health plan (e.g. for a reduction in hours or a non-FMLA covered leave of absence).
posted by Pax at 9:27 AM on July 15, 2011 [1 favorite]

To (slightly) correct valkyryn, people who become eligible for Social Security disability benefits are eligible for Medicare, but not until 24 months after their benefits start (except in cases of ALS or end stage renal disease.) There is a provision, however, for extension of COBRA coverage beyond the usual COBRA period until such time as Medicare kicks in.

Assuming he has has stopped working, your uncle should go apply for Social Security disability benefits right away. As part of its efforts to reduce the disability backlog, the Social Security Administration is currently making a big effort, and largely, I think, succeeding, in approving claims for impairments like stage 4 liver cancer early on. There is a large "compassionate allowance" and "quick disability determination" push being made. Without knowing what kind of liver cancer he has, I can't say that he would meet the criteria for a compassionate allowance--some forms of liver cancer qualify--but, because he is at stage 4, I believe he would be eligible for a quick disability determination.

Best of luck to you and your family.
posted by pasici at 9:28 AM on July 15, 2011 [2 favorites]

Thank you all for your answers. I'm sending this to my father so he can sort through the information. This is all so new, and everything posted will help my family figure out the best steps. I've done a little research on possible lawyers in my uncle's city, so I'll save that info in case it becomes necessary.

We're definitely not knowledgable about all of this. I guess you always hope you'll never have to be.
posted by afton at 10:05 AM on July 15, 2011

To add a little bit more color to valkyryn's, iminurmefi's, and la petite marie's comments:

FMLA (Family Medical Leave Act) is a federal law that protects your job (if your company qualifies). Long- and short-term disability is an optional thing your company can choose to offer employees as a benefit.

It might be helpful to think of it this way:

FMLA: The thing that protects your job from being taken away/given to someone else. STD/LTD: The thing that enables you to be paid some percentage of your salary while you're on leave.

This is why people often say the two "run concurrently." One is for preserving the employment status, the other for preserving the paychecks.

And I totally second the suggestions that only the HR department at your uncle's place of employment is qualified to answer the specific questions about the situation. And if they don't/won't, it's time to get legal advice.

I wish your family the best of luck during this difficult time.
posted by ImproviseOrDie at 10:10 AM on July 15, 2011

I work for a disability insurer. In fact, I am a disability claims analyst. I do not know where your uncle works or the specifics of his disability policy. I speak in generalities.

In general, COBRA applies to health insurance. Long Term Disability benefits from a private insurer (i.e., not SSDI) are not health insurance, so they are not, as far as I am able to tell, included in COBRA.

However, as long as your uncle was covered by the LTD plan at the time he had to stop working, and as long as he continues to be disabled -- however that term is defined in his policy -- he can probably continue to get an LTD benefit even if his employment stops. The policies my company issues do not stop paying a benefit just because you get laid off after you become disabled. I'm fairly confident that this is typical among disability insurers.

I get questions like yours from my claimants all the time. "What should I do about COBRA? Do you guys cover that?" Answer: No, you need to talk to your employer. "Will I lose my LTD benefits when my FMLA leave runs out and they terminate my employment?" Answer: No, as long as you are disabled and getting a benefit when your employment ends, your benefits will continue.

Again, I don't know where your uncle worked and I haven't seen your policy. I'm speaking from my own experience of administering LTD policies and claims.

You should absolutely ask these questions of your uncle's employer. These questions are exactly the kind that HR fields ALL THE TIME.

Good luck!
posted by That's Numberwang! at 10:41 PM on July 15, 2011

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