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    COBRA for out-of-business company

    My company is about to go out of business. Unfortunately, I may need Long-Term Disability shortly. What happens with that? Does it exist only as long as the company exists, or is it like COBRA and I can continue it if I keep paying in?

    Maybe it differs from company to company and my question is unanswerable except by the insurance company. . . I'd really prefer not to give them an advance heads-up about me, though! None of their literature mentions this situation.

    #2
    If you have STD, LTD or other replacement income benefits, file all your claims for benefits asap along with LTC claim.

    No, LTC not 'like' cobra at all.

    Cobra applies to medical insurance coverage only!

    If you need to file a claim for LTC benefits for a company that is going out of business soon, you should do it now.

    If the LTC carrier has caught wind that the company is going out of business, the carrier can make it very difficult for you to get payment for your claim.

    Hire a disability benefits attorney ASAP. Attorney's specialize in areas of practice. Litigation for LTD disability is different from SSA disability benefits.

    Best of luck.

    Comment


      #3
      If your employer is paying premium for a group Ltd policy, I would think the policy would be cancelled once the company goes under. Unlike health benefits, I don't think there are any laws forcing extension of LTD extension. I could be wrong, Maybe you could ask about LTD under the pretext of asking about all your benefits...life insurance, health,retirement, etc...whatever they offer.

      If your policy is a private policy that you pay the premium thru payroll deduction, you may be able to convert the premium pay mode so you pay it.

      Good luck.
      Kathy
      DX 01/06, currently on Tysabri

      Comment


        #4
        Cobra regs are most clear when it addresses continuing health insurance coverage for employees who terminate employment.

        When the employer-company no longer exists, and the group plan and group premiums no longer exists, Cobra is much less clear.

        Just to be clear, cobra does not apply to your Group STD, LTD, Life or LTC insurance benefits.

        Cobra does apply to your Group Health Insurance benefits.

        For companies going out of bussiness, cobra (=continuation of health insurance coverage) lies somewhere between the legal responsibility of the employer and legal responsibilities of the insurance carrier, and the individuals paying 102% of the health premiums for a company and a group health plan that no longer exists.

        A group plan's profits usually help offset the cost of cobra premiums and administrative expenses to the insurance carrier for terminated employees. That is greately diminished if the group no longer exists, and all employees are 'terminated'.

        Cobra regs can't require the insurance carrier to opperate at a loss when there are no longer group insurance premiums from which to pay claims, but instead a group of individuals who pay premiums based on a financial formula that no longer exists.

        Depending on the circumstances, sometimes neither the former company/employer, (aka no-longer-existing-group-health-plan), nor the insurance carrier has a legal responsibility to continue paying group insurance coverage/claims beyond a very limited period of time, as limited as 30 days continuation of coverage. The 30 days typically allows the insurance carrier time to notify the insured individuals that coverage no longer exists.

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          #5
          Thanks, and one more question

          Dispiriting that coverage will now evaporate. The main thing that worries me is whether it means my coverage will officially lapse--I've had it uninterrupted for 3 decades, long before MS symptoms.

          In other words, if I want LTD at my next job, will I need to pass a physical?

          I still hope I can keep working at least for a while, but there's no way anybody who examined me would advise coverage for LTD. Sounds like I'd better get a new job before this one goes away.

          Thanks to all for the advice--much appreciated!

          Comment


            #6
            Group LTD typically does not require a physical exam. There is a 2 year 'pre-existing condition' limit in typical LTD policies in leu of the physical exam, and the lower premium cost.

            A pre-existing condition exclusion means any claim for LTD benefits made within the first 2 years of the effective date of the policy, will be considered a claim for a 'pre-existing condition' and will not be covered.

            STD policies typically do not have a 'pre-existing' condition clause. The STD benefits are paid usually for a short period of coverage, typically 6 months of disability.

            You should be aware that when filing a claim for STD the date of the claim will have baring on the 'pre-existing' condition exclusion for LTD benefits also.

            Most HR benefits personel believe? that all exployees will automatically 'transition' from STD benefits to LTD benefit payments, and that is simply not true. Particularly if the STD claim= or the date of on-set of disability, is within the 2 year pre-existing condition exclusion in the LTD policy.

            Hope you have many prosperous years of work life ahead of you, and best of luck.

            Comment


              #7
              Thanks!

              Very helpful.

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