Laid Off, Need Health Insurance?

IntroductionIf becoming unemployed isn’t bad enough, you also just lost your employer sponsored health insurance. While nothing I can suggest will make this bad situation into happy times, ideas for coping with the resulting health insurance problem can help. The choice of health insurance needs to be made quickly to retain your important health insurance protection. Are you going to bite the high cost of COBRA or strike out on your own health insurance plan? Not enough money for COBRA? What are there other choices?To COBRA or Not to COBRAIf you were employed by a company that was large enough to be COBRA qualified, then you can keep your current health insurance but it will be a painfully high price. Your recent employer is required by this Federal Law to send you notice of eligibility. You have 63 days to either choose COBRA or not and then it’s off the table. You can then keep a COBRA health insurance plan for up to 18 months.The hard part of COBRA is that the cost can be out of reach particularly since your paycheck just got eliminated. If you have substantial ongoing medical costs or pre-existing conditions, this will provide an essential bridge to your future group coverage and is the only safe route to go. A COBRA health insurance plan is “HIPAA” qualified and will not exclude your pre-existing health conditions. Also, when you are hired and can join a new employer based group plan, the HIPAA rule will apply and your new group plan will count your time on a COBRA plan as “Creditable Coverage.”Note: COBRA coverage is dependent on the prior employer’s group plan. If the company is out-of-business or ends their group health benefit, you will lose your COBRA benefit.State ContinuationTexas and some other states have a mandated health benefit continuation. This can help if your employer is too small for COBRA (less than 20 employees). Generally it is a much shorter benefit period (Texas is 6 month) but it is worth asking about if no COBRA health insurance benefit is available. Like the COBRA option, paying the whole price is the downside.Short Term “Gap” Health InsuranceInexpensive “Gap” plans are designed for short time periods and need protection for an unexpected acute illness or injury. These plans can work great if you are “between jobs” and are just waiting for eligibility with your new employer’s group health plan. Generally, short term policies are offered for up to a six month contract period.They are not a safe choice for anyone with significant pre-existing medical conditions since prior medical conditions will be excluded on Short Term plans. Also, Short Term plans are not considered “Credible Coverage” under the HIPAA rule and your future employer group plan can apply pre-existing condition exclusion if your gap between group plans is 63 days or more. Third, while Short Term plans have simplified health screening, you still have to have good health to qualify. A fourth concern is the potential risk of a new illness or injury occurring that can require treatment beyond the very limited contract time period. Individual / Family Health InsuranceIf you and your dependents can qualify on the initial health screening and can afford the price (High but often much less than COBRA), your own Major Medical Insurance Policy is a good option. The High Deductible plans that are also Health Saving Account compliant can deliver good protection from the risk of a major illness or injury on a tough budget. Unlike Short Term “Gap” plans; a Major Medical plan (including the High Deductible versions) has real staying power and substantial benefits.Many employers, particularly smaller companies, don’t offer a group medical insurance benefit. Having your own health insurance can open your job hunt to these positions without employer benefits. Having your own medical benefits also can help open the door to being self-employed.SummaryFirst, good luck on your job hunt. While you are looking for new work, don’t risk being without the financial protection of health insurance. COBRA can be painfully expensive but may be necessary if you have ongoing healthcare needs. An inexpensive Short-Term “Gap” insurance plan can be a good fit for some situations. Getting you own Major Medical Insurance policy is a third option that can also broaden your employment prospects.