When You Lose Your Health Insurance Coverage
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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 Zimmerman provides a couple of tips if this is an issue that's hit home 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, 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 deductible and the amount of your co-pay for office visits. Often group plans offered by employers 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 . . .Â
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 Information - www.coverageforall.org [4] 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 [5].
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 [6].
Let other Blue Avocado readers know about additional tips and suggestions by adding a Comment below.
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