Health Insurance Options for the Unemployed and Uninsured
August 24, 2009
Being laid off or having your hours reduced doesn’t have to mean an end to health insurance, but for many workers it does because the cost of continuing coverage is too high, especially for those over 30. We spoke with industry experts about what your options are once that coverage runs out.
When you leave a job, you may be able to keep your health insurance using a program called COBRA (because it was created by the Consolidated Omnibus Budget Reconciliation Act of 1986). The catch is that you have to pay for your own insurance plus a 2 percent administrative fee.
With so many Americans unemployed and unable to afford COBRA, Congress included a COBRA premium discount in the stimulus bill. The discount provides a 65 percent subsidy for nine months of coverage to those who lost their jobs on or after September 1, 2008.
Even if you can afford the premiums, COBRA plans can end suddenly. If your former employer goes out of business or stops offering group health insurance, or you fail to make your monthly premium payment, the insurance company can cancel your plan.
“I was on COBRA and was a few days late with a payment, so I got cut off,” says Janet Haney, a freelance writer in San Francisco. “My only option was to get high-risk insurance at over $550 a month.”
In most cases, COBRA coverage ends after 18 months, at which point the insurance company must offer you an individual health insurance policy. “The benefits are usually watered down and the price is about two to three times that of COBRA rates here in New York,” says Susan Combs, president of Combs & Company, a New York City insurance firm.
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