Virtually all employer health insurance contracts last only 12 months. At the end of the year, the employer — in search of ways to reduce costs — may choose a different health plan or cease providing health insurance altogether. Strangely, the only people with private health insurance guaranteed to last longer than one year are people who purchase insurance on their own, like self insured companies.

Some employers do not contract with an insurance company to insure their employees, but they have enough employees to do risk pooling like an insurance company would. These employers are called "Self Insured." During the past couple decades, the number of employers who have switched to self insurance has increased dramatically, starting with employers with many employees and spreading to those with fewer employees. Since self insurance does not involve a contract between an insurance company and an employer, it is not subject to state insurance regulations (by federal ERISA legislation). Avoidance of state insurance regulation is one reason for the increase in self insurance.  However, self insurance also gives the employer more flexibility in plan design and benefits including contract tenor.¹

¹ http://www.healthinsurance.info/HISELFI.HTMAds  by Google 

Freelancers Union is a non-profit organization in the United States that represents the needs and concerns of the independent workforce through advocacy, information, and service.

Freelancers Union provides low-cost health, dental, disability, and life insurance to over 12,000 independent workers in New York. This includes the freelancers, consultants, independent contractors, temps, part-timers, contingent employees and the self-employed that make up one-third of the American workforce. Because they are employed in nontraditional arrangements, these independent workers do not have access to employer-based insurance. Therefore, Working Today, a 501(c)3 nonprofit organization, launched Freelancers Union in 2001. Freelancers Union has created a portable benefits delivery system, linking benefits to individuals, rather than to employers, so independent workers can maintain benefits as they move from job to job and project to project.

Freelancers Union offers health insurance as a non-profit health insurance brokerage. In 2001, it created an infrastructure platform known as the Portable Benefits Network (PBN). The PBN provides health insurance to independent workers at less than half the price of average HMO premiums in the individual market in New York City, and also offers life and disability insurance, financial services, resources, and discounts. As of June 2006, nearly 12,000 independent workers receive benefits through the PBN and several thousand more advocacy members have registered to support its mission.¹

¹ http://en.wikipedia.org/wiki/Freelancers_Union

The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, is a law passed by the U.S. Congress and signed by President Reagan that mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving employment. COBRA includes amendments to the Employee Retirement Income Security Act of 1974 (ERISA).

The Act allows employees of a qualifying employer and the employee's immediate family members who had been covered by a health care plan to maintain their coverage if a "qualifying event" causes them to lose coverage. A qualifying employer is generally an employer with 20 or more full time equivalent employees. Among the "qualifying events" listed in the statute are loss of benefits coverage due to (1) the death of the covered employee, (2) termination or a reduction in hours (which can be the result of resignation, discharge, layoff, strike or lockout, medical leave or simply a slowdown in business operations) that causes the worker to lose eligibility for coverage, (3) divorce, which normally terminates the ex-spouse's eligibility for benefits, or (4) a dependent child reaching the age at which he or she is no longer covered. COBRA imposes different notice requirements on participants and beneficiaries, depending on the particular qualifying event that triggers COBRA rights. COBRA also allows for longer periods of extended coverage in some cases, such as disability or divorce, than others, such as termination of employment or a reduction in hours.

COBRA does not apply, on the other hand, if employees lose their benefits coverage because the employer has terminated the plan altogether.

COBRA does not, unlike other federal statutes such as the Family and Medical Leave Act (FMLA), require the employer to pay for the cost of providing continuation coverage; instead it allows employees and their dependents to maintain coverage at their own expense by paying the full cost of the premium the employer previously paid, plus up to a 2% administrative charge (150% for the disability extension). Employees and dependents can also opt for a lesser form of coverage, e.g., to choose continuation coverage under a plan that only covers the employee, but not his or her dependents, or that only provides medical and hospitalization coverage and does not pay for dental work, if those options are available to covered employees. Employees and dependents lose coverage if they fail to make timely payments of these premiums. Employers are required to inform employees and dependents upon loss of coverage, in writing, by at least fifteen days before the coverage ceases.¹

¹ http://en.wikipedia.org/wiki/Consolidated_Omnibus_Budget_Reconciliation_Act_of_1985

With worker’s compensation, the duration of insurance works differently.  Whoever insures the worker at the time of injury is responsible for coverage for the duration of treatment.  In some cases, the duration of treatment is a lifetime.

It benefits insurance companies to keep insurance contracts within a calendar year, because it’s difficult and risky to project risk beyond 12 months.

• Visible gaps in coverage
• Traditional insurance plans offer little portability and do not typically carry over from year to year.
• Traditional models of insurance contract tenor need to be redesigned to accommodate an increasingly mobile workforce and demands for insurance to behave more like a savings mechanism.