For some, being laid off from a job and in turn losing Group Health Insurance benefits can hurt as much as not receiving a paycheck. If this has happened to you or someone you know it’s important to understand all of the options that are available to you in order to maintain coverage.
In 1986 The United States Congress passed The Consolidated Omnibus Budget Reconciliation Act (better known as COBRA). In essence this law gives workers and their covered dependents the right to continue their current group coverage for a limited time period due to certain life circumstances such as job loss (either voluntary or involuntary), divorce, a reduction in hours causing a change in eligibility, or over-age dependent status among other things.
If you are covered by an employer’s Group Health, Dental or Vision plan, and you’re laid off or choose to leave your position, by law you will be offered COBRA continuation. The cost of coverage varies from 102% of the premium amount if your employer is only subject to Federal COBRA but can be higher if your state has its own COBRA laws. For example, here in California if your employer is subject to California COBRA laws the rate can be as high as 110% of the premium amount.
For a lot of people who are losing coverage and have little or no money coming in, paying 102% or more in order to continue their Health Insurance coverage is just not an option. Congress and the President have tried to address this issue with a limited subsidy provision as part of The American Recovery and Reinvestment Act of 2009. While helpful if you qualify for the subsidy, once it has been exhausted you are still responsible for the full COBRA premium.
Before you decide to go without Health Insurance because your COBRA premium is too expensive consider looking into an Individual or Family Health Insurance plan. More often than not your dollar purchases more coverage under an Individual or private Health Insurance plan than it does compared with a group or employer sponsored plan. This means that if you qualify for an Individual Health Insurance plan you will in all likelihood, be able to retain the same level of benefits for less money. Alternatively, you can apply for a high deductible plan that keeps your monthly premium to a minimum but still offers a stop-loss point that protects you and your assets in case of a large medical expenditure. Why is individual Health Insurance usually less expensive? The one word answer is “underwriting”.
Don’t let the word “underwriting” scare you away from exploring Individual Health Insurance options. While your current and past medical history will be looked at during the underwriting process it doesn’t mean that if you have dealt with health issues in the past or are currently living with a managed condition you will be automatically declined. Most insurance companies make allowances for health issues such as allergies, arthritis, hypertension, and elevated cholesterol to name a few. While most insurance companies have similar underwriting standards there are often differences, so it can be a good idea to have some assistance.
The absolute best way to investigate your Individual and Family Health Insurance options is to let someone else do it for you! A qualified Independent Health Insurance broker will be able to present you with a host of plan designs with varying premium levels from several or more insurance companies. A broker should help you choose a plan and insurance company based on your needs as well as help you through the application and underwriting process. Here are a few additional reasons to purchase a plan through an independent Health Insurance broker:
o It doesn’t cost you any more money to use an Individual Health Insurance broker
o You can call your agent for service instead of the insurance company
o Your broker is a third party advocate charged with doing what’s best for you
o At renewal time the broker can provide you with other options outside your current insurance company
COBRA remains a good option for people who can’t qualify for individual or family coverage. However, for most people it pays to investigate the available Individual Health Insurance options. This can best be done by contacting a local Independent Insurance broker. Explain your situation to the broker and ask what he or she can do for you.