The end of the government subsidy for COBRA recipients has led many individuals to seek alternate health insurance options, even before their COBRA benefits are exhausted. If youâ€™re one of these people, donâ€™t assume health-care reform will bail you out.
Health-care reform has little to do with COBRA, the federal Consolidated Omnibus Budget Reconciliation Act that allows laid-off workers to purchase the health insurance formerly provided by an employer.
In fact, some early-adoption components of the reform bill may initially increase your premium, according to Mark A. Cesarano, a managing consultant at the Savitz Organization (www.savitz.com). Major elements of the reform, including preventative care without a copay, coverage for adult children up to age 26 and automatic acceptance of coverage for children with pre-existing conditions will cause health plans to assume more cost. Down the road, however, these initiatives should lower cost.
â€śRight now, the loss of the subsidy is whatâ€™s hurting,â€ť Cesarano says. The subsidy, which went into effect March 2009 as part of the economic stimulus package, provided a 15-month safety net to individuals who lost their jobs; meaning recipients paid only 35% of premium while the government picked up the rest. The benefit ran out June 1 so now, individuals who are laid off or have already used up their 15 months of subsidy, face skyrocketing premiumsâ€”a hefty 102%â€”for the remainder of their 18-month COBRA term.
Hereâ€™s eight tips for keeping the cost of health care down when you are out of work.
Seek out Local Help
Contact a knowledgeable insurance broker, advocacy or health education/research group, or the office of the insurance commissioner within your state. These experts can direct you to options that suit your particular financial and health situation as well as educate you on the specific laws in your state.
Donâ€™t Let Your Coverage Lapse
Pay the high premium until you come up with an alternative if you can, the experts suggest. Lapsed coverage of more than 63 days could make it difficult to get health insurance in the future, particularly if you or a family member is in poor health.
Convert to an Individual Plan
Try to convert your group plan to an individual policy, but be prepared to experience higher copays and deductibles and lower claim limits, the experts warn.
Unlike group plans, individual plans can deny coverage for health conditions until the reform law evolves in 2014. But donâ€™t automatically assume youâ€™re ineligible, says Carrie McClean, customer service manager at ehealthinsurance.com. You may discover your circumstance falls in a â€śgray areaâ€ť because youâ€™ve managed the condition over time.
Apply for Gap or Short-Term Medical Plan
This coverage works like an indemnity plan, said Holly Health, principal at Peopleâ€™s Health Insurance (www. peopleshealthinsurance.com), a Clearwater, Fla., insurance agency, and only provides coverage for anywhere from 30 days to a year. Short-term plans have no copays, can offer low deductibles and require a minimal six-question eligibility survey.
Itâ€™s a good option for people who are close to getting a job, said Cesarano, and ideal for the out-of-work baby boomer who is not yet eligible for Medicare, but is close, Heath said.
If Youâ€™re Youngâ€¦Turn to Mom and Dad
If youâ€™re under 26 with no insurance, get on your parentsâ€™ plan. You donâ€™t have to be a full-time student or dependent to qualify for this reform perk.
The coverage doesnâ€™t take effect until Sept. 23, so insurers arenâ€™t required to provide extended coverage until the new plan year, typically Jan. 1. Carriers may initiate this sooner, Cesarano said.
Check out HIPPA Plans
HIPPA â€“The Health Insurance Portability and Accountability Act of 1996 (HIPPA) allows people who exhaust their COBRA eligibility to buy certain policies regardless of health as long as they donâ€™t have the 63-day gap in coverage.
The HIPPA plan guarantees issuance, but is â€śextremely expensive, as much as 2.5 times a group plan,â€ť Heath said.
Look Into High-Risk Pools
People with poor health are eligible for high-risk pools mandated effective July 1 by the reform bill. According to Erin Moaratty, chief of external communications for the Patient Advocate Foundation, wrinkles in these pools still require reconciliation, particularly in those states that have had no similar plans prior to the reform legislation. But there is a potential problem: The new law requires a six-month waiting period, a long time for someone in poor health. Click here for more information.
All in the Family, Under Separate Plans
Insure family members under different plans can save money, according to the experts. This tack is suitable for family members that combine clean bills of health and pre-existing conditions.
â€śWhy put everyone in a costly high-risk plan when you can save money by splitting up your family among several individual plans?â€ť says McClean.