Post-COBRA health insurance options

  • Joining a spouse's plan usually best, but not always practical.
  • HIPAA protections make it easier to purchase individual plan.
  • Trade groups and associations often offer health insurance.

As unemployment rates hover around 10 percent, growing numbers of jobless Americans worry about securing health care insurance.

Unemployed workers across America temporarily retain health insurance coverage from their former employer through COBRA, the landmark health care legislation passed by Congress in 1986.

The government is now paying 65 percent of monthly COBRA for up to 15 months. Workers have to pick up the tab for the remainder.

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But what happens after COBRA coverage expires and new jobs remain scarce?

New health care reform legislation will change your options over the next few years. But for now, health insurance and financial experts say unemployed workers have an array of post-COBRA options for medical coverage.

The following are health insurance alternatives experts recommend:

Sign on to your spouse's plan

Joining a spouse's plan is often the cheapest and most comprehensive option for medical and prescription drug coverage.

"Anybody with a working spouse should try to get on that spouse's plan,'' says Phil Lebherz, founder and executive director of the Foundation for Health Coverage Education based in San Jose, Calif.

Mark Cesarano, a former COBRA benefits administrator for companies, says turning to another employer group plan through a spouse offers "best benefits at the lowest rates.'''

However, there is one major road block to this coverage: Unemployed workers typically cannot join a spouse's plan until the company's annual open-enrollment period.

Buy an individual plan

Under the federal Health Insurance Portability and Accountability Act, or HIPAA, your former employer's health insurance carrier has to offer you an individual medical insurance plan after COBRA expires, Lebherz says.

Typically, the insurer that continued your health benefits via COBRA will mail you a letter explaining HIPAA coverage options. Lebherz urges people to ask the carrier about the coverage at least a month before your COBRA is set to run out.

There's nothing to preclude you from shopping for a private health insurance plan with another insurer that may cost less or better suit your needs.

However, the HIPAA protections allow you to buy a plan from your former employer's health insurance carrier that has no expiration dates, meaning you can keep the coverage as long as you need it provided you pay the premiums.

In addition, your former employer's health insurance company must cover pre-existing medical conditions you have, something not true of other private plans.

Jobless workers who buy individual insurance should not expect it to be as cheap as their former work-based plan, says Cesarano, who is now a managing consultant with The Savitz Organization, an employee benefits firm in Philadelphia.

"Don't expect to get the same type of coverage at the price your employer offered because your employer had the power of group purchasing,'' Cesarano says.


Buy coverage offered through your home state

All 50 states offer public medical coverage options for qualified adults and separate low-cost medical coverage for children, Lebherz says. However, there are eligibility requirements, so not every resident qualifies.

With contributions from hospitals, insurers and private industry, the Foundation for Health Coverage Education has put together an online database that contains information about the public medical coverage options available, Lebherz says. You can review the data at


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