If you've been laid off, the first things you think about are keeping food on the table and bill collectors away from the door. But there is one intangible you really do need: health insurance.

Once you leave your job -- because you were laid off, quit or were fired -- you basically have five choices on health insurance: continue on your current group plan and pay the premiums yourself, enroll in your spouse's plan, buy individual insurance, use a state-sponsored plan or -- the worst of all worlds -- go without.

So gird your loins, guard your wallet and learn your rights. The choices you make now could affect you and your family for a long time.

Get the facts
Problem: Insurance laws vary from state to state, the language is confusing and even experts don't have all the answers. You need a quick overview of your situation.

Solution: Call your state insurance commissioner's office, ask for a consumer representative and have them walk you through your options.

"It's a free call, it's a free service and an objective third party who knows the market can help you sift through the options," says Kathleen Sebelius, the Kansas insurance commissioner and president of the National Association of Insurance Commissioners.

It's also less stressful than playing phone tag with your former employer and easier than trying to decode reams of insurance paperwork on your own. Don't be afraid to ask questions. The most important one: Find out what deadlines you have to meet to keep your options open on insurance and what coverage options are available in your state.

Option 1: COBRA
The Consolidated Omnibus Budget Reconciliation Act of 1986 -- popularly known as COBRA -- allows you to keep your current insurance coverage for at least 18 months after you leave your job. The downside: you have to pay all the premiums yourself -- and that can get expensive. Even a healthy 20- to 30-something can count on a monthly bill of $200 to $300.

Patricia Yoon, 25, used COBRA for a couple of months when she was laid off two years ago.

"I did think it was expensive -- $200-$250" a month, says Yoon, who was laid off again in June. "It's tough, especially when you're young and saving is not a priority -- when you're living hand to mouth."

But don't let the cost scare you off.

"It's one of a handful of options, but it might be the best one out there, especially for a person with a pre-existing condition," says Paul Fronstin, a senior research associate with the Employee Benefit Research Institute, a nonprofit organization that studies benefits and related issues.

Since you're continuing your current coverage, you can't be dropped or face exclusions. And because it's a group plan, the carrier can't single you out for a rate increase if your care gets expensive.

Federal law guarantees that if you maintain group coverage without a 63-day gap, you and your dependents won't face any exclusions when you find work and enroll in another group plan.

Your employer can require a waiting period, as long as it applies equally to everyone, but cannot exclude you because of a pre-existing condition.

COBRA is available only if you worked for a company with 20 or more employees, had health insurance through your employer and your former employer is still in business. The idea of COBRA is that you piggyback on another group plan. If that plan doesn't exist because the company went under, there is no COBRA.

If your company offers COBRA, sign up -- whether you can afford the payments or not. Here's a little-known insurance fact: Once your employer notifies you of your COBRA rights, usually via a letter mailed at or near the time of layoff, you have 60 days to enroll, says Fronstin.

From the day you enroll -- by filling out a COBRA form and mailing or faxing it to your employer -- you have exactly 45 days to pay the premium. But watch the calendar -- if you mistime your calculations by one day, you're out in the cold.

Bottom line: From the time you leave your job, you have more than three months to get another position, find a better insurance deal on your own or get a part-time job to make the COBRA payments. But if you do have a calamity, chances are that COBRA premium will be a lot cheaper than the hospital bill.

"It's tough medicine because when you're laid off it's really a challenge to pay those COBRA bills," says Gail Shearer, director of health policy analysis for the Washington, D.C., office of Consumers Union, the group that publishes Consumer Reports magazine.

Option 2: Your spouse's plan
Obviously, this is not an option for everyone. Compare the cost and the coverage to what you would have with your own COBRA plan. Does it offer what you need? One big plus: If you're moving from one group plan directly to your spouse's plan, you can't be excluded for any pre-existing health condition, such as a pregnancy.

Before you sign on the dotted line, ask yourself two questions:

• How stable is your spouse's job? and
• How strong is your relationship?

Option 3: Individual insurance
Shopping for an individual insurance policy is a lot like buying a car -- only more confusing.

"It's kind of daunting," says Christopher Trela, 34, who was laid off in September. When his company went out of business, COBRA was no longer an option. "For the first time, I have no health insurance," he says.

Trela is one of the lucky ones. He's survived the layoff and is building his own multimedia production company, TRELA Inc. But he admits he still hasn't dealt with the health insurance issue.

"I want insurance right now, but have no idea how to get it," he says. The cost of no coverage hit home recently when he realized that it was time for his annual eye exam and probably a new pair of glasses.

"I thought, 'Boy, that's going to cost me several hundred dollars,' " he says.

Best advice: Start shopping for health insurance as soon as you lose your job. Whether you're going to build your own business, temp or look for a new position, make securing health insurance a priority.

Again, your state insurance commissioner's office is a great resource -- and one of the few that doesn't have a financial stake in your decision. They can tell you about complaints against a company, the firm's reputation and its financial stability. Be realistic -- virtually all insurance firms will have had some complaints.

Make a list of insurance companies or HMOs you want to investigate. Don't know where to start shopping? Call the company that your former employer used, if you liked the coverage. Ask friends and family members what companies they use -- and if they are satisfied. Check with your doctors to learn what plans they honor. That should give you a good start.

Next, make a list of coverage options that are important to you. Do you want access to specific doctors or facilities? Do you need low-cost prescription refills? How much do you want to pay for a doctor visit? Are you just looking for a high-deductible policy to cover catastrophic situations? Do you want access to alternative therapies?

Now contact the companies on your first list and see how their coverage matches up with your wish list. Look at four things: how much are premiums, what will the policy cover, what will it exclude and how much is a doctor visit.

Before you sign up, research the stability and service reputation of your picks.

Several companies study the financial strength of insurance companies, HMOs or both. A few of the top ratings firms are Standard and Poor's, A.M. Best, Moody's Investor Service and Weiss Ratings.

If you want to know how a prospective company stacks up on the customer service end, check out its ranking with the four major accreditation agencies: the National Committee for Quality Assurance, the Accreditation Association for Ambulatory Health Care, the Joint Commission on Accreditation of Health Care Organizations and URAC, the American Accreditation HealthCare Commission.

They can give you the Cliff's Notes version of what to expect. For example, NCQA, an independent nonprofit agency, conducts regular member-satisfaction surveys and grades each company on service and care.

The ugly truth: You may have had group insurance through your employer for 20 years and not be able to buy an individual health insurance policy.

A recent study by the Kaiser Family Foundation found that relatively healthy people shopping individual policies are denied coverage or face exclusions for such routine conditions as hay fever or pregnancy. And while a company can't drop you if you get seriously ill, it can raise your premiums until you can't afford the policy.

The rule with individual insurance: you pay more, you get less. Conversely, group policies "tend to get more bang for the buck and avoid the problems of the individual market," says Shearer.

If you can't afford COBRA and don't have a spouse, an individual policy may be your best choice. Read the fine print, shop smart and know your state regulations.

Option 4: State-sponsored plans
What if your former company is too small to qualify under COBRA or the company's gone under? You may be eligible for a state insurance pool.

Under federal law, every state must provide this choice, sometimes called a high-risk pool. In theory, you pay the premium and, in turn, reap the reward of group coverage. You can also use a state pool if you exhaust your COBRA coverage -- usually after 18 months -- and still don't have another job. But the jury is still out on whether the plans are a hit -- or a miss.

"High-risk pools have not been a tremendous success story from our point of view," says Shearer, citing high premiums for limited coverage, waiting lists and only an estimated 100,000 people in the pools nationwide. "The picture's not pretty."

Kids only
Every state also has a low-cost health insurance plan for children. You don't necessarily have to have a low income to qualify. If you have children under 18, ask about the plan when you talk to the state insurance commissioner's office.

A national toll-free number, (877) KIDSNOW, will connect you with the children's insurance program in your state. Children are eligible up to age 19.

Option 5: No insurance
Joining the ranks of this country's 42 million uninsured is not a good option. Going without insurance puts both your physical and financial health in peril, as medical bills are the fourth-biggest reason people go into serious debt, according to statistics from the National Foundation for Credit Counseling.

If you can't afford anything else, at least pick up a catastrophic insurance policy. While it won't cover every doctor visit -- or be as cheap as you might expect -- at least you won't be wiped out if you or a family member become seriously ill.

Before you make any decisions, evaluate your financial and health situation, do the research and see what coverage choices are available.

"You have to take your time to understand what you are buying," says Fronstin. "It's not hard to do if people are willing to make the investment."

Dana Dratch is a freelance writer based in Atlanta.

-- Posted: Aug. 6, 2001