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Keeping yourself covered when
you're out of the company plan

COBRA not only optionIf you quit or lose your job you'll most likely be offered continued medical coverage for up to 18 months through a plan called COBRA (Consolidated Omnibus Budget Reconciliation Act). COBRA offers the same coverage you had under your employer's plan, but you'll have to pay the entire premium -- plus up to 2 percent more for administrative expenses.

That's a heck of a jolt for most employees. Instead of paying a portion of your health coverage, you now could be billed $600 or more per month for traditional coverage for a family of four. If a PPO or another less extravagant policy covered you, your COBRA coverage will cost considerably less, but still more than if your employer was picking up the major portion of the tab.

You have other options for medical coverage between jobs -- or you may want to risk going without any coverage for a while.

Craig Copeland at the Washington-based Employee Benefit Research Institute, says only about one-quarter of the people eligible for COBRA sign up. The main reason so few people elect COBRA is the high premiums.

Many people, especially single people who are healthy, opt to go without coverage because they're starting a new job in a couple of weeks and their new employer will provide medical coverage either immediately or within the next few months. If the employee becomes ill or is injured before the new coverage starts, he or she can opt for COBRA coverage as long as it hasn't been 60 days since they left their last job.

People who don't want COBRA but do want some sort of less-expensive coverage can opt for a short-term policy through any number of independent companies that offer health insurance. But be warned: A short-term policy will nullify your ability to get guaranteed coverage, according to Martha Spenny, vice president at American Community, a health insurer based in Livonia, Mich.

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In essence, if you had group coverage at your old job and then exhausted your COBRA coverage but still hadn't found a job that provided health insurance, an independent insurer would have to offer you coverage with no pre-existing condition clauses, says Spenny. You may not like the premium, but you'd have coverage.

Short-term coverage can be very cheap. Spenny estimates that an individual male, in his 30s, might pay $30 a month with a $500 deductible. But, she warns, short-term doesn't cover pre-existing medical conditions, only new illnesses or injuries.

If, for example, a family of four wants a short-term policy, the premium would be based on the medical condition of each individual. If one person had controlled blood pressure problems, Spenny says that might warrant a higher premium.

Another option would be an HMO -- some offer short-term plans and have open enrollment all year.

-- Posted: Nov. 29, 1999

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