Health Insurance Articles
How To Lower Your Health Insurance Costs During Unemployment
2010-06-27
More Americans than ever are experiencing the reality of unemployment. One of the scariest things about unemployment is the loss of health insurance. COBRA and short-term health insurance are your two options during unemployment. A basic understanding of group coverage vs. individual coverage, and the two options available to you, are important before making a decision about unemployment health care.
In our current health care system, employers are the biggest provider of group health insurance to employees. Access to a new group health plan will only come through membership in a specialized association, or a new job. Individual health insurance is another option, but it won't likely provide the same level of coverage you had with a group plan, and it is not guaranteed that you will get individual coverage. An individual plan is purchased directly through an agent or insurance agency.
In 1986, the U.S. Congress passed the Consolidated Omnibus Budget Reconciliation Act, known as COBRA, to provide a short-term continuation of group health coverage that would otherwise be ending. Typically, these benefits last for an additional 18 months from the date of benefit termination, or qualifying event.
COBRA provides a continuation of your group health insurance plan by you taking over the premium payments from your former employer. This is one form of unemployment health care. The main drawback to this option is that is can be quite expensive. The American Recovery and Reinvestment Act of 2009, the most recent stimulus package, includes a discount on COBRA premiums for those who qualify of up to 65%.
The second option for unemployment health care is to purchase an individual short-term health insurance plan. These plans are gap coverage intended to provide benefits for 30 days up to 1 year. Short-term individual insurance is usually much less expensive than the group benefits covered through COBRA. You will have options with short-term insurance, selecting the option which fits your needs best.
The most important things to understand about short-term health insurance, or gap coverage, is that it is intended for healthy people, and will not cover pre-existing conditions. For example, if you have been receiving ongoing treatments for an illness, usually defined as within the past 36 months, such treatments will not be covered under gap insurance.
The loss of a job doesn't have to mean the loss of health insurance. Unemployment health care is available to you through COBRA and through short-term insurance. It is important to weigh the options between the two choices and make an informed decision to protect yourself.
