Health insurance options for the unemployed
Tamara E. Holmes
A high unemployment rate not only hurts the economy, but it affects the general health of America. Americans with jobs are more than 30 percent more likely to have health insurance than those who are unemployed.
Most people get their health insurance through their employers, and employers typically subsidize some or even all of the cost, says Robert Giordano, an independent agent who sells health insurance in New York and New Jersey. But when a job ends, the health insurance typically does as well. However, options are available for people who want to maintain health insurance coverage while they’re searching for new employment.
Consider COBRA. The Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, is the first thing you might want to consider if you lose your job, says Stephanie Cohen, CEO of Cohen & Golden, a company in Maryland that sells health insurance and financial products.
Through COBRA, employees of companies with at least 20 workers can keep their group health benefits for up to 18 months if they lose their jobs. However, while your employer might have paid some of your health insurance costs in the past, you likely would be required to pick up the entire tab for the premiums through COBRA, plus a 2 percent administrative fee.
While COBRA provides an opportunity for the unemployed to continue their health benefits, it’s not practical for many people because of the high costs, some experts say. People who recently lost have their jobs often don’t have the extra money to pay for health benefits under COBRA, according to Sara Collins, vice president of The Commonwealth Fund, a nonprofit organization that works to make health care more accessible.
Get a plan of your own. Another option for people who’ve recently lost their jobs is to buy an individual health insurance plan. However, individual plans factor health and age into the rate you’ll pay. If you’re young and healthy, you might easily find an affordable plan. But if you’ve had any health problems, insurers can deny you coverage until 2014, when the federal health care reform law will stop that practice.
However, even if an insurer offers coverage, the premium likely will be high if you have health problems, so you may not be able to afford it, Cohen says. If you do intend to look for an individual policy, a broker can help you to identify lower-cost options, Cohen says.
Think short-term coverage. Another way to get health coverage while you’re between jobs is to consider short-term, or temporary, insurance. For example, GradMed provides major medical coverage for six or 11 months for graduates of nearly 200 colleges and universities. Through such plans, you’ll pay a premium and typically will be covered for major medical events, such as the diagnosis and treatment of pneumonia.
However, you may have to pay a deductible, and such plans typically don’t cover wellness visits such as physicals or routine exams. However, these plans will buy you some time as you look for a job that will offer full health care benefits.
Explore “mini” options. “Mini-med” health plans are yet another option for the unemployed. Such plans provide limited health insurance coverage for things such as emergency treatment and inpatient hospital procedures. However, these plans typically have low annual coverage limits (sometimes as low as $1,000 or $2,000). So if you’re diagnosed with a major illness, there’s a good chance you’ll run out of your coverage pretty quickly, according to an analysis of mini-med plans by Consumer Reports. While mini-med plans aren’t an ideal long-term solution, they could provide relief while you’re hunting for work.
Mix and match coverage. If you lose your job and need to find insurance for your family, consider using a variety options, Cohen says. For example, you might be eligible for COBRA but be unable to afford to pay for coverage for everyone in your household. In that case, maybe you can pay for your own coverage under COBRA if you have a chronic medical condition and then you can buy a mini-med plan or a short-term plan for the healthier members of your family. “Sometimes you have to do a mixture of things; it doesn’t have to be all or nothing,” Cohen says.