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Money Management (Distributed by the New Jersey Society of Certified Public Accountants)

When You're Out Of Work: Health Care Coverage Alternatives And Advice

If you've lost your job, you no doubt have a number of important concerns, one of which is insuring yourself and your family against the high cost of health care. Although there are several options available, all of them are costly, particularly if you're accustomed to an employer's group plan. When it comes to health insurance, there is strength in numbers, says the New Jersey Society of Certified Public Accountants (NJSCPA). Group plans carry lower premiums, a significant portion of which is typically paid by the employer.
So what do you do if you find yourself without health insurance? If your spouse is employed and has coverage at work, enrolling under his or her plan is likely to be the best alternative. Other options include COBRA coverage, and individual, short-term, and, as a last resort, state-sponsored plans.

COBRA Coverage Continues Benefits
 The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) allows displaced workers to continue group coverage for themselves and their dependents for at least 18 months. COBRA is available for workers who had health insurance through a company that employs 20 or more people and is still in business. If you choose COBRA coverage, you pay the entire cost of the group rate premium.
You have 60 days to sign up for COBRA, starting from the day you leave your job. Upon signing up, you're given 45 days to pay the premium. This means that, in effect, before paying for COBRA coverage, you have a window of roughly three months should you want to look for a policy that better meets your needs and budget.

Individual Coverage Is Costly
 When it comes to individual health insurance, finding the right balance of coverage and cost can be
a challenge. Rates and options vary from state to state and premiums are generally higher than costs for COBRA.
The individual insurance market offers the same plans as the group market including health maintenance organizations (HMOs), preferred provider organizations (PPOs), point-of-service (POS) plans and traditional fee-for-service arrangements, and deductibles range anywhere from $250 to $1,000. Your budget, physician preferences, and health requirements all play a role in determining which plan is best for you.
CPAs recommend that you begin your search by examining your health insurance needs and listing coverage options important to you. Do you want to have access to specific doctors and hospitals? Do you need a pharmaceutical benefit? How much are you willing to pay for doctor visits? Keep in mind that plans offering the most choices in doctors or hospitals tend to cost more than plans with limited choices. For recommendations, contact an independent insurance agent, talk to others who are in the same situation, or look for information on the Internet.
Once you have narrowed your choices, it's a good idea to check out the company's reputation and financial stability with your state insurance commissioner or with a rating service such as A.M. Best.

Additional Options Available To Address Specific Needs
 If you just need coverage for a short period of time, perhaps while you are waiting for a new job's benefits to become effective, and you are healthy, you might consider looking at short-term policies offered by some health insurers. These may cover you for two to six months. Research your options carefully as the cost for these policies can vary immensely.
Members of a trade group, professional organization, or even an alumni association may be able to join a group health insurance plan. Again, be sure to compare the coverage and costs of these plans with other options before enrolling.
In some states, if you own a business and have at least one other partner or employee, you might qualify for a group plan. Does your husband do some marketing work for your business? If so, your company may qualify as a two-person business, eligible for a group policy and rate.
If private insurers have turned you down, you may be eligible for your state's high-risk pool. Be aware, however, that premiums are usually more expensive than for plans sold by private insurers.

Don't Go Without
 CPAs recommend that everyone have some type of health insurance. Without it, a serious illness could wipe out your savings and put you in financial difficulty for years ahead.

Published: June 9, 2003

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Money Management is a weekly column on personal finance distributed by the NJSCPA.

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