insurance

Life after a layoff: health insurance

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.

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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.

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