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Archive for November, 2012

Turning 27…What are my insurance options?

Posted on: November 7th, 2012 by Kristen Marie

Dear COBRA Insurance Direct -

I have been very fortunate the past 27 years of my life to be covered under my father’s health insurance policy. Not only have I been covered, my parents have continued to pay the health insurance cost for me and never once asked that I send them a check. Now on the verge of reaching my 27th birthday, I have to find my own health insurance plan. I currently am self-employed and trying to launch my own internet business.

In terms of a plan – I am pretty healthy but like to go to the doctor when something comes up. My insurance plan with my Dad was awesome – gym membership, mental health services, any doctor, any hospital – you name it, the plan had it. I don’t need all the same bells and whistles, but I would like something that offers good coverage and that I can depend on. Do you have any ideas on where I should start looking for insurance? Is COBRA a good choice? I have a pretty limited budget.

Thanks -

Trying to avoid my 27th birthday

Dear Trying to Avoid My 27th Birthday,

First of all it is great that you are thinking about this ahead of time. All too often people don’t think about this until it is too late and they have already let their coverage lapse. In your situation you have a few options for health insurance that could help you maintain the kind of coverage you want at a price you want. It’s a good idea to explore each one and find the plan that best suits your needs. Here’s an overview of your options:

  • COBRA Insurance: Under the current laws, it sounds like you would likely qualify for COBRA given your father’s plan covers at least 20 full time employees. Under COBRA you could maintain the exact same insurance plan you’ve had for up to 36 months. The main advantage of this – you get to keep the great plan your Dad has. The main disadvantage – it will probably be really expensive. Under COBRA you will be responsible for paying the entire premium yourself plus a 2% administration fee. To find out the exact amount, contact the health insurance company and inform them you are losing your dependent status and want to know how much it will cost to continue their plan with COBRA. Based on the plan details you shared, likely this will be $400 or more monthly.
  • Private Insurance: The second option to explore is a private insurance plan. Likely since you said you are healthy and you are young, you can find a pretty affordable plan with good coverage for around $125-$150 per month. These plans are offered by major companies like Blue Cross, Aetna, and others and are able to offer pretty affordable care to people who are healthy. Under these plans you will be able to go to the doctor, fill prescriptions, etc. but they likely won’t cover everything your Dad’s plan did. Find out more about private plans, coverage, and prices.
  • Trade or Alumni Organization Insurance: Depending on your industry and your educational past, you may be able to find an affordable health insurance plan through these organizations. Many alumni associations offer health insurance and many trade organizations also do. One of the most popular is the Freelancer’s Union. They provide coverage to lots of people in your situation.

No matter what you decide, it is incredibly important that you maintain your insurance company. Having a lapse in care can disqualify you from future plans and make future insurance much more expensive. Moreover you never know when illness will strike and you will need your health insurance.

Ten Essential COBRA Questions

Posted on: November 5th, 2012 by Kristen Marie

looking at an insuranc policy

Understanding COBRA insurance is important for anyone whether they are employed, unemployed, insured, or uninsured. Knowing your options and the basics will ensure you are prepared in case you find yourself in a situation in the future where you have to make difficult decisions about health care and COBRA.

What is COBRA

COBRA, short for Consolidated Omnibus Budget Reconciliation Act, is a law that was passed in 1986 to let people continue to use their health insurance plan after job loss. Under this law, employees who meet the criteria for enrollment can continue to use the exact same health insurance plan they had when they were employed. In most cases it lasts for 18 months and will cost 102% of the whole premium. Additionally the benefits extend to children, spouses, and any other dependents.

Who can use COBRA

Under the law there are three conditions that must be met in order to use COBRA. First the health plan that the employee was on must cover at least 20 full time employees (or their part time equivalents) and must still be active. Secondly, the employee must have lost their insurance due to involuntary or voluntary job loss without gross misconduct. This could include quitting, being laid off, or even retiring. Finally, the person signing up for COBRA must be an eligible beneficiary which could include dependents and spouses. Additionally children and spouses can qualify for COBRA in the event of divorce, death, Medicare qualification, and loss of dependent status.

How many months can I use COBRA

In most cases COBRA insurance can be used for 18 months and it starts on the day you would have lost coverage. In some cases, COBRA can be extended to 36 months if you have a disability or second qualifying event. Additionally children and spouses can use COBRA for 36 months in the event of death, divorce, loss of dependent status, and Medicare qualification.

What happens to my insurance if I get divorced?

In most cases, as long as your spouse’s plan meets the qualifying requirement, then in the event of divorce you will qualify for COBRA for up to 36 months. It is your responsibility to inform the health insurance provider and sign up for COBRA. Failure to do this right away can result in not being eligible for benefits. In most states you are also eligible for COBRA in the event of legal separation.

How much is COBRA

Under the law COBRA insurance costs 102% of the premium. This includes the entire premium – both what you paid and what your employer paid – plus a 2% administration fee. You can usually find this amount listed on the COBRA enrollment paperwork or you can calculate it yourself.

Do my children get to use COBRA

As long as the covered employee qualifies based on the plan type, then children are eligible as well for COBRA coverage. The law and benefits extend to the entire family. If you learn you are not eligible for COBRA, then you can look into state CHIP plans that may cover your children.

What can I do if I can’t afford COBRA?

There are multiple options for people who can’t afford COBRA and the best option for you will depend on your health status, age, and personal situation. The most common options that people consider are private insurance plans, government or community insurance plans, and finding a trade/alumni insurance plan. Private plans can usually save people up to 65% on the monthly cost and actually offer very similar coverage to COBRA.

Where do I sign up for COBRA?

Signing up for COBRA is a relatively easy process. To sign up you will need to get the COBRA election form form your former employer and complete it by the due date on the form. You will also need to pay the premium to start the insurance. It is retroactive back to the day your coverage was lost and will cover any expenses incurred during that time.

How will my coverage change with COBRA?

Your coverage will not change at all with COBRA because you are keeping the exact same plan. In some instances if the company you worked for changes aspects of their plan, then your plan will also change just like it would if you were still employed.

Can I use COBRA if I quit?

Yes. COBRA insurance works for voluntary and involuntary job loss which includes when someone quits their job. Many people are unaware of this option and miss out on potentially using COBRA for their health plan.

Making Sure Preexisting Conditions Stay Covered

Posted on: November 1st, 2012 by Kristen Marie

Dear COBRA Insurance Direct,

Although I am currently employed, I am fearful that my company may soon go out of business and I have a pretty serious preexisting health condition that would likely disqualify me from many private plans. Additionally my company doesn’t have their own health plan but instead purchases a plan through a business association and the plan is in the name of the business trade association. If they do go out of business (which looks like will happen) – will I be able to purchase a family policy through the business association? Or will I be able to find a new plan due to the HIPAA act which makes it illegal to exclude people with preexisting conditions as long as too much time doesn’t pass. Should I apply for COBRA instead? It just seems expensive…

Thanks!

– Confused in Minnesota

Dear Confused in Minnesota –

First of all – you are definitely one step ahead of the game since you are already thinking about this. Many people don’t give a second thought to health insurance until it is too late and then scramble to find a solution. Being proactive before your company goes under is a smart move and will likely save you money and help you find the best coverage for you. This is even more important since you have a preexisting condition that could exclude you from certain policies and plans.

Let’s start with the good news. Under the HIPAA – Health Insurance Accountability and Portability Act – you are guaranteed to have access to continued health insurance that includes coverage of your preexisting condition as long as you sign up quickly for a new policy. In most cases you have 63 days to sign up for a new plan before companies can exclude your preexisting condition. Additionally some states mandate that you use COBRA as an option first if it is available. It is best to check with your state health care office for exact regulations in your state.

Now let’s talk about COBRA. In order to be able to use COBRA the company has to remain in business – without a business and a health plan, there is no COBRA insurance. So is the company does go out of business as you expect, COBRA is off the table and you will need to look for a new policy.

In terms of buying an individual health plan from the business association, that will be up to them. They may allow you to purchase a plan since you will remain in that industry, but they also may not. Health insurance is expensive and they may not be willing to take on an additional expense.

Likely your best option will be to find a new plan as soon as you learn the company is indeed closing. Make the start date of that plan the same day as your last day of coverage. Make sure to find a plan that allows you to continue to use the same doctors and networks you prefer for your condition and when you shop around for policies, ask specific questions about your health condition and coverage. The more you ask the better the policy will be that you find.

Thanks –

COBRA Insurance Direct

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