Coping with Joblessness and Paying COBRA

Dear Insurance Adviser, My husband is between jobs. While he is unemployed, we have to pay the health insurance premium, which is pretty high at $1,300 per month for our family. Is this premium tax-deductible for us? -- Needing a Break

Dear Needing, I won't respond to the question about the tax deductibility of health insurance premiums because that's a better question for your tax accountant. I do have some suggestions that may help you ease the burden of that $1,300 monthly nut, however.

I believe your insurance question concerns COBRA, a great federal program that guarantees people who lose a job the right to continue with the job's health insurance for a period of time -- typically 18 months -- with no disruption in coverage for any existing medical problems. That's the good news.

The bad news for a family like yours is that the entire premium, including what the employer had paid, must now be paid 100% by the employee. Of course, it's the worst possible time for that, when one of the key family incomes is completely gone! A lot of people uninsured in this country are uninsured because they lost their health insurance and can't afford to pay the whole COBRA premium. It's truly sad when that happens. If something medically serious occurs during that time, it can be the cause of financial ruin for the family!

You did not mention whether you are employed and whether health insurance is available through your employment. You and your family have lost coverage through your husband's employer, so you should now have an open enrollment period to add yourself and family members to the group policy where you work, with full coverage for existing health issues.

If health insurance through your employer is not an option for you, here are a few suggestions that involve purchasing individual health insurance to help reduce your costs.

  • Do choose the COBRA option for least two to three months. Applying for individual health insurance or getting on any kind of medical assistance program takes that long.
  • Do apply for an individual family policy in your name. Consider a high deductible and other options to bring down your premiums. Look into health savings accounts as a way of paying the deductible and other noncovered medical expenses with pretax dollars.
  • If any family members are turned down for coverage, continue only them on the COBRA plan. Discontinue COBRA on all other family members.

One of the benefits of having an individual policy on family members is that in most states, the coverage is guaranteed renewable to Medicare age and isn't affected at all by future employment changes in the family. If your spouse does land a job with group health insurance benefits, you would have the luxury of taking him off the individual coverage and then comparing the costs and benefits of his new group coverage for other family members to the costs and benefits of keeping them on the health insurance individual policy. Not a bad position at all to be in!

Go catch yourself a break!

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