When You Lose Your Health Insurance Coverage

With 46 million Americans lacking health insurance, health care is a society-wide crisis as well as a personal, individual one, and there aren't ready solutions on either level. Steve ZimmermanA provides a couple of tips if this is an issue that'sA hit homeA for you:

When Francine, a 30-year-old program assistant at a Virginia domestic violence task force recently found out she was being laid off, the shock sent her mind spinning. It didn't take her long to wonder, "How will I pay for health insurance?"

Like most laid-off employees, Francine's initial reaction was that the smart thing to do would be to continue her insurance through the task force. But with a little legwork,A she came up with a surprising alternative that saved her more than $100 per month.

While she was employed, the organization paid for Francine's health insurance. She now had the option to continue on that same insurance plan. The federal program known as COBRA mandates that people must be able to retain their insurance coverage for up to 18 months after the end of employment. Under COBRA, however, the employee is responsible for paying all of the insurance premium.

A Bit of Research May Save You Money

Many people will choose COBRA when they're laid off because it's easy. All you need to do is complete the form provided by your former employer. But Francine considered another option: buying her own individual health insurance plan. Although this path isn't for everyone, if you are healthy, and particularly if you are younger, it can save you significant money.

How did Francine decide what made the most sense financially? She asked two questions:

  • "Do I have any health problems?" Even minor health problems may disqualify you from coverage. According to the insurance industry, only 11 percent of applicants are turned down, but that number almost triples if you are over 60. If you have any health-related problems, AKA: pre-existing conditions, your best bet is to stick with COBRA.
  • "How often do I use my health insurance?" If you are not using your health insurance much you might want to consider raising your deductibleA and the amount of your co-pay for office visits.A Often group plans offered by employersA include a lot of benefits that are not used by individuals. If you don't plan on using them, why should you pay for them?

Francine compared how much she would have to pay for an office visit, vision insurance, and the emergency room deductible between COBRA and the individual plan. Her answers showed that she was much better off getting a new plan, independent of the task force. With her COBRA, she would have paid $375 for her monthly premium; the new plan cost $240!

Keep COBRA Coverage in the Interim

If you think that individual health insurance might be right for you, you can start the application process online at most major health carriers in your state such as United Healthcare, Blue Cross / Blue Shield or Anthem. Here's one catch: it's important to avoid a lapse of coverage. So, sign up for COBRA, explore other options and then make the change once you have secured coverage elsewhere. Individual coverage won't save money for everyone, and once you say no to COBRA you can't go back.

Besides COBRA . . .A

It's a good idea to look forward to the time when your COBRA runs out, just in case you don't get a new job (that includes health insurance!) by then. The Foundation for Health Coverage InformationA - www.coverageforall.orgA provides state-by-state suggestions for both public and private health insurance options, as well as hotline numbers for assistance. In addition, the Actors Fund has a remarkably good site on finding health care coverage in many cities at their Health Insurance Resource Center.

EDITOR'S NOTE: For an update on COBRA regulations, see Steve's April 1, 2009, article, Health Insurance Options: A Bit of Good COBRA News.

Let other Blue Avocado readers knowA about additional tips and suggestions by adding a Comment below.

Comments (8)

  • Thanks, Steve for a great overview of the subject.  I've read that only about 20% of COBRA-eligible workers sign up for the benefit because of the exhorbitant premiums--there is a huge difference in cost between that of a 30-year-old and that of someone in her 50's.  Good to know:  you have 60 days after your employer-paid benefits end to decide on taking on COBRA...and another 45 days to make the first premium payment.  The health insurance conversion documents can be mind-boggling in their density: make use of the phone numbers to talk to a human, and take notes.     The article's links to information on alternative health care programs (coverageforall.org and the Actors Fund site) were extremely helpful to me

    Feb 05, 2009
  • Thank you for the best tips.It helped me a lot.I am having problems with the payment of my health insurance.And I think COBRA will be the best solution for my problem.

    Jun 25, 2009
  • Thanks for this nice article, it' very useful for me.

    Sep 03, 2009
  • COBRA qualifies you to retain the group sponsored health plan coverage you have with your employer even after leaving the employer. You pay the cost of the group sponsored coverage plus a small admin fee usually about 2%. There should be NO difference due to any age related factor so that is incorrect. Group plans are not age-sex rated or medically underwritten like most individual coverages. SO, if your cost of insurance for a single employee was $350 combining the employer share and the employee share you pay $350 +2%. The only way the ages of the enrollees count in a group plan is when the insurance company is able to get a census and rate according to group composition. That happens rarely in new business pitches. Once a group is on the books for a year then often the rate is adjusted due to actual experience if it is a larger non-pooled group. If it is a group pool, ie it is community rated then it is priced based on the overall experience of the pool. In each of these instances an older, sicker employee is subsidized by a younger healthier employee that is the core model of insurance. You should not find that you have a higher rate due to age when looking at COBRA extension.

    Sep 15, 2009
  • Anonymous

    Very informative article. Made me aware of the different options available.

    Jan 15, 2010
  • As Karen mentioned the premium gets way higher for someone in 50's compared to someone in 30's. So i agree one should do some research before switching health insurance, as it could cost you much more than one can imagine. After some digging i found a useful resource where one can find health insurance quotes.
    Altogether, very informative article.

    Jan 15, 2010
  • Anonymous

    Health insurance is really a good thing to have and is a must have for everyone, God forbid if something goes wrong or anything bad happens to anyone, this insurance helps the victim financially. I am proud to have one for me and my family. Thank you Workers compensation Policy audit

    Sep 27, 2011

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