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Cobra Health Insurance Explained
By: Tony Nokak
As more people face job cuts in this slowing
economy, the issue of COBRA health insurance becomes more important.
This is a very brief review of a few of the most important points
if you are suddenly faced with the need to pay for your own health
insurance coverage.
The acronym “COBRA” was brought
about by a tax law change that required employers with more than
25 employees to offer temporary health insurance in the event of
lay-offs and other circumstances that interrupt coverage under employee
benefit plans. It simply means that an ex-employee pays the former
employer in order to continue to stay on the company’s medical
insurance plan. You must make this election within 30 days of your
job termination by delivering the appropriate payment for your insurance
to the employer. COBRA ensures that you will have access to continued
coverage, but usually at a higher price than other types of medical
insurance. COBRA is meant only as a temporary solution, not as a
permanent medical plan. And, depending on the specific insurance
plan, the COBRA coverage may not be effective if you move to another
residence away from the insurance plan's coverage area.
SMALL BUSINESSES are exempt from COBRA, meaning
that they do not offer the option of medical benefits to an ex-employee.
Some companies continue to offer ex-employees medical benefits by
simply not informing the insurance company of the termination. Be
careful, this can backfire. Most small group medical pans do not
allow coverage for ex-employees.
DIRECT CONVERSION of your medical
insurance is available with most insurance companies regardless
of whether you use COBRA or not. If you are on a group insurance
policy, simply call your insurance company and ask them if you can
convert to an individual insurance policy. Do this as soon as possible
after you know that you are being laid-off. Sometimes this option
is less expensive than COBRA and may give you access to a wider
range of plan options like low cost, high deductible catastrophic
coverage. But also be aware that many auxiliary benefits like dental
insurance will not be available.
SHORT TERM MEDICAL INSURANCE is easy to purchase
in most states. This is usually much less expensive than COBRA but
it does not cover the expense for any pre-existing medical condition.
It would not be appropriate, for example, if you were pregnant.
Most of these policies today are purchased directly on the Internet.
www.MedSave.com offers short term medical coverage to residents
of 46 U.S. states and foreign countries. Despite the name “short
term”, you can usually re-apply for this insurance when it
expires and thereby continue to do this for as long as you need
it.
For INTERNATIONAL COVERAGE, you need a separate
type of policy since most U.S. policies do not provide significant
coverage overseas. This coverage is also inexpensive and easy to
buy online. You can specify your departure date and return date
so that you pay for only the coverage that you need.
You can find more Health
Insurance Information here
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