What can I do if my employer has not paid my insurance premiums and is now filing for bankruptcy?
UPDATED: August 24, 2012
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If you pay health insurance premiums to your company, and the company declares bankruptcy and does not actually make its payments to the health insurance company, the result for you will depend on the type of bankruptcy filed as well as the specifics of your health plan. In general, however, you will have your premiums paid, or you will receive a refund for the money that was withheld from you.
Medical Insurance and Bankrupt Companies
If your company is filing a Chapter 11 (reorganization) bankruptcy, your health plan may not be effected, and your company will continue to hold the agreement with the health insurer throughout the bankruptcy. This means that even if the company's payments are interrupted, the contract still stands and your coverage will not be effected. In a Chapter 7 liquidation bankruptcy, on the other hand, your health plan will probably be terminated, and any payments will often remain unpaid. This subjects you to possible problems and collection attempts by the health insurer in the future. In this type of situation, you should take action to protect yourself.
If you find yourself in this position, your first step should be to contact your health plan administrator. They are required to give you 60 days advance notice before any reduction or change to your benefits, thus giving you the chance to adjust your plan and perhaps continue your coverage under another option.
In terms of any unpaid health insurance premiums on past health coverage, you are, in most cases, well-advised to file a proof of claim with the bankruptcy court so that it is on record that the payments to the health insurer are the responsibility of your company. This makes the debt officially theirs and may prevent the insurance company and/or the medical facility from pursuing you for the payments later. Since the money was withheld from your paycheck, it cannot be discharged by a bankruptcy. This proof of claim will initiate the process of listing the debt of your health coverage on the company’s list of debtors to be included in the bankruptcy. This ensures that the bankrupt company remains responsible for the medical insurance, and any unpaid amounts cannot be passed on to you.
Recovering Health Insurance Premiums from Bankrupt Companies
If you worked for a company that went bankrupt, and you are worried about your health insurance premiums, you should contact an attorney immediately. S/he can provide proper guidance for filing your proof of claim with the bankruptcy court or taking other measures needed to preserve your rights.