COBRA Insurance
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Health Coverage While Unemployed - COBRA insurance discussed
By: Tony Novak
A key decision
that millions of Americans face each year is whether to elect "COBRA"
“HIPAA” or “COBRA alternative” health care
continuation coverage when they lose employer-provided health coverage.
About two thirds of all Americans are covered by employer-provided
health coverage but with the recent increase in layoffs across the
country, the number of workers losing these employer-provided health
benefits is at a record level. Workers typically have three or more
options available and the cost can vary dramatically between the
various choices available. Some may opt to take no health
insurance coverage and bear the financial risk themselves. In
order to make the best decision, they need to know about two laws,
COBRA and HIPAA.
COBRA
Employers who have over 20 employees and offer group health coverage
are required to offer continued coverage to their workers, former
workers or dependents who lose eligibility for the group health
plan. This benefit does not apply if the health plan withdrawals
coverage or if the employer terminates the group health plan before
the worker is enrolled under the COBRA benefit. When workers lose
health insurance coverage, COBRA
is usually not the best solution unless the employee or a dependent
is in the middle of a course of medical treatment because this is
the most expensive health coverage option. But in some cases, for
example, if a worker has serious medical conditions or the worker’s
spouse is pregnant, COBRA coverage may be desirable.
HIPAA
Most group health plans offer members the right to convert to a
variety of individual plans while preserving continuation of coverage
benefit. In many cases you may also change to another insurance
plan in your local market by providing evidence that you were covered
by a prior health plan. For “preferred risk” applicants,
changing insurance plans can result in significant savings, but
this will generally will not be an appealing option for those with
significant pre-existing conditions.
COBRA ALTERNATIVES
For the majority of healthy workers who just want to be protected
from unforeseen medical expense until they land another job, short
term medical coverage is the best answer. This coverage is issued
online within minutes, covers all ordinary any necessary medical
treatment from any medical provider in the United States and requires
no referrals. The cost of this coverage is less than 1/2 of the
price of COBRA plans. The two downsides are that this coverage does
not cover pre-existing conditions and you must re-enroll after 6
months.
ELECTING NO COVERAGE
Individuals in some states may wisely elect to keep no health coverage
while unemployed with the knowledge that they can join a health
plan at any time, even after they are receiving medical treatments,
and have all of their medical expenses for pre-existing medical
conditions covered by the new plan. Three of these states are New
Jersey, New York and Vermont. The negative is that this type of
health coverage, if needed, is ridiculously expensive. Some plans
in these states run more than $2000 per month for family coverage.
RESOURCES
IRS Notice 98-12 provides this information in the form of questions
and answers. The IRS publication on this subject can be found at
ftp://ftp.irs.ustreas.gov/pub/irs-drop/n-98-12.pdf
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Insurance Information here
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