Your Money

Getting Health Insurance after a Layoff

It’s important to weigh your options carefully

-Susan Crandell

If you’ve just lost your job, the last thing you want to think about is getting health insurance on your own. Force yourself.  It can be critical to your physical well-being, and making the wrong choice can cost you a bundle. 
    
Here’s the drill.  You have four options:  do COBRA, use your spouse’s plan, buy individual insurance, or enroll in a state-sponsored health plan.  Notice that I am not even mentioning a fifth option:  lose your coverage.

COBRA:  Since 1986, companies with 20 or more workers have been required to make health insurance available to former employees for at least 18 months, though the employee must pay the entire premium. It’s expensive, but if you have a pre-existing condition that might make it difficult to get individual insurance, COBRA can be the best way to go.
 
Good news: the new federal stimulus plan will help you out for nine months.  You’ll pay just 35 percent of the total premium (note that your share gets bumped up to 100 percent for the second half of COBRA coverage).  Ask your employer for the forms you must fill out.  This subsidy is offered retroactively, so you can qualify if you lost your job as long ago as last September.
    
Also note a bit of wiggle room in the COBRA regulations.  You have 60 days to sign up for COBRA and then 45 days to make the payment.  If you get another job (and another health plan) during that period, you can transfer over without paying for COBRA (providing, of course, that you have not filed any claims).  If you do this, be very careful to check current regulations regarding deadlines and payments. 

Your spouse’s plan:  If your husband’s job is secure (and so is your relationship), this can be a great option.  Note that some plans require that you sign up 30 to 60 days before a qualifying event, i.e., your unemployment, and some have waiting period before the coverage kicks in.

Individual insurance:  If you can’t afford a comprehensive plan, consider a high-deductible or “major medical” plan.  The premiums will be much lower, but you’ll have to pay out the first $3,000, $5,000 or even $10,000 before the plan starts paying (be sure to check whether this deductible is per person or for your whole family).  This can be a reasonable option for people without chronic conditions who don’t anticipate many medical expenses and are willing to roll the dice that there won’t be any surprises. 

Also investigate organizations like Freelancers Union, that offer the price advantage of purchasing insurance as a group.  There may be an association in your industry that offers insurance coverage to its members.
 
A state-sponsored plan:  Most states provide this option for people who aren’t eligible for COBRA (maybe their company has gone bankrupt, or is too small to qualify), but the details vary from state to state.  Find out what the deal is from the state insurance commissioner’s office.  Note that even if you don’t qualify for the state-sponsored health plan, your kids might.  Go to insurekidsnow.gov or call 877-543-7669 for information.

For more insurance information, read When You Lose Your Job—and Your Insurance