What Is COBRA?
COBRA is NOT health insurance. It is, rather, a federal law that helps some terminated employees stay in their group plan for several months. It can be critically important for some families, and can work out well if the insured worker can find another job with group insurance before the benefits run out.
However, this does not work out for everybody. Here are some reasons why COBRA is not an unemployment medical plan choice for everybody.
Not all companies are under this mandate. Some companies never had a group plan in the first place. Others are too small to fall under the rules. So terminated employees from these companies will not have his option for a major medical plan. Some unemployed people do not have this option at all.
When a terminated employee accepts an extension of their group medical plan under COBRA rules, they will have to pay for it. In many cases, they not only have to pay the premium they paid before, but they will also have to pay the old employer contribution. Many terminated employees are shocked when they see that their premium will double or triple because the old company is not contributing any longer. So sometimes the premiums are just too expensive for unemployed people to pay!
What are some unemployment health insurance alternatives?
Unemployed people do have some alternatives. These alternatives can also be considered by people who are working, but have jobs or self-employment that does not have group medical benefits.
Individual Health Insurance Policies – Sometimes, if a family is fairly young and healthy, a private plan may actually be a less expensive way to find coverage. Policies are individually underwritten by health insurers, and they may offer low rates to a fairly healthy family.
Before you switch from group to individual major medical, make sure you understand the difference between the old and new policies. There are some circumstances, as with some preexisting conditions or pregnancy, that a private plan will not be a good alternative.
High Risk Health Plans – Every US state has some plan or pool for people with pre-existing conditions. There are qualification rules, possible waiting periods, and sometimes there are high premiums though. Federal health reform is starting to make this easier and less expensive to obtain, but those changes are still being implemented. You should be able to find out more by searching for the high risk health plan in your state. New Jersey has a very different plan than Texas has, for example, so it is important to understand the local rules.
Low Income Health Plans – If you have a very low income, you may be able to get the help you need from a private, federal, state, or county health program. Medicaid is the federal major medical plan for very low income people with few assets. CHIPS covers children from low to moderate income families. Many counties also have health systems with sliding scales fees. Private foundations may offer financial aid for specific health conditions.
You can find out more about your options by looking for state or county resources. One good website is PPARX.org. It has a handy zip code search for help in your area.
How To Find Health Insurance Choices Where You Live
You can find many zip code health insurance quote forms. They will give you competitive prices on major medical insurance, and will also give you contact information for local agents who should know the ropes, as they say, in your city or town.