Did you work for a Company that went bankrupt? You may not have any insurance, including Cobra coverage

Bankruptcy can mean cancelling all insurance coverage, including chapter 11, so employees can take their place in line for money owed when it comes to health care claims. This is scary but happening more and more today. I was speaking a physician’s office recently and this same topic came up in conversation. A former employee of one of the bankrupt firms on Wall Street was caught in the same predicament, no Cobra, and yet the employee was told they would have Cobra coverage.

So if one is unlucky enough to be caught up in this scheme, well just be prepared for the worst when it comes to health care claims and be sure to ask questions and investigate to perhaps find out ahead of the game if possible. One woman even had her labor induced early for fear she would not be covered upon hearing the news and still have to pay over 20k in hospital bills when she got the word.

With bankruptcies growing both personal and business wise, this scenario will continue to grow unfortunately and on top of all, the government doesn’t even track these individuals to add to the list of the uninsured. BD

When Archway & Mother's Cookie Co. told employees in an October letter it would "go out of business immediately," some workers frantically sought medical care while they believed their insurance would still cover the costs. In Ashland, Ohio, a pregnant employee had labor induced before her due date. Another worker bought a $6,000 insulin pump for her diabetic daughter. "I called my doctor at home and said, 'I need to have my gallbladder removed this weekend,'" recalls Janet Esbenshade, a 37-year-old mother of two who lost her job packing cookies.

Those employees and many others ended up saddled with huge medical bills anyway. Archway was self-insured -- and when it filed for bankruptcy on Oct. 6, there wasn't enough money in its coffers to cover hundreds of thousands of dollars worth of outstanding health-care claims along with all its other debts.

Workers weren't eligible for Cobra, a federal act that gives certain laid-off employees the right to temporarily continue health-care coverage at group rates. That's because Cobra doesn't apply when a company terminates its insurance plan. Some are abruptly eliminating insurance and leaving laid-off workers with bills for medical expenses incurred before the shutdowns, a trend that is exacerbating health and money problems for tens of thousands of people nationwide.

The government doesn't track how many people wind up uninsured. When companies file for reorganization under bankruptcy rules, they often continue their insurance coverage. Companies that liquidate usually terminate these benefits.

Similarly, Nadine Deck says she was out on disability with a chronic breathing disorder. When Archway shut down, she stopped receiving disability checks. So she turned to unemployment and received checks over four weeks. But the government stopped paying, saying she couldn't collect while on disability. The government now wants its $900 back, she says.

The Human Toll of the Credit Crunch - WSJ.com