Health Insurance Articles
How Lapses On Health Coverage Can Affect Your Premiums
2010-11-17
In this difficult high unemployment period, many people are finding themselves at risk for lapsing in their health insurance coverage. This event of lapsed coverage is a danger because often a person who loses their job will not be able to afford COBRA coverage, which they are entitled to by law to avoid lapses in their health insurance coverage. The problem is that this coverage can be very expensive. When unemployed, the personal budget often cannot handle higher premiums since income is close to half of what it was before being unemployed. The larger problem with lapsed coverage is that the even though a person was previously covered, there may be problems obtaining new individual health insurance coverage because they have a new risk of being denied health insurance coverage due to pre-existing conditions.
The lapsed coverage issue is important to consider because becoming unemployed will lead to one of two choices if the goal is to avoid the pre-existing condition. A pre-existing condition clause will be cited by insurance companies when coverage lapses resulting in the denial of benefits for that medical condition that existed in a period of non coverage. There is a short window or 'grace period,' when a person is protected by law. There is a period of two months for a person who has had a lapse is protected. However, this is a very short period.
It is best to get insurance coverage immediately, either through COBRA or through an individual short term policy until the new coverage can be obtained at a new group coverage in the new job to come. The policy premium could be higher than what the previous coverage cost from the previous employer policy was. It is possible to lower the premium on the individual short term policy by having a higher deductible. Higher deductible health insurance plans are available along with flexible spending accounts. These kinds of plans can help lower premiums in a time when the budget is stretched.
Those who are seeking this type of coverage must be sure that the coverage will be major medical coverage. If a policy taken out is the type of discount coverage that will cover doctor visits and prescription drugs only and comprehensive medical benefits but not major medical, then this type of insurance will not protect from pre-existing condition exclusion. Even in this time of new legislation on health care, it has become more common for people to seek Private Market Health Insurance. More Americans are purchasing Private Individual/Family plans so that they can have continuous coverage and benefits that are not dependent on employer based coverage.
