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I’ve Left My Job, but Don’t Want the Benefits to Leave Me…

by Jeff Haaz

The day that the Affordable Care Act was signed into law, that great, loud sound you heard across the nation was a welcomed sigh of relief from those who are uninsured, have pre-existing conditions or otherwise lost their employee benefits. However, for a great number of people that sound may soon turn into a gasp rather than a sigh.

For those who have found themselves without their full corporate benefits, are entrepreneur’s or work for a company that does not provide benefits, the promise of affordable health coverage may still be quite elusive. The much touted subsidies, which will be offered by the government in 2014 when the individual mandate begins, are offered only to those earning between 133 percent and 400 percent of the poverty level. For an individual, this means if you earn more than $43,400 – no soup for you.

That being said, what can you expect if you’re 60 years old and need to shop for health insurance on the individual market? Steep insurance premiums and extremely difficult underwriting. True, all comers will be able to purchase a plan in 2014 – but that’s still two years away (and the Supreme Court is currently chewing on the legality of an individual mandate). Today, a full 30 percent of applicants ages 60-64 are turned away completely (according to America’s Health Insurance Plans, an industry organization) and a significant portion of the remainder, are subject to rate ups – increases of 25-100% in plan costs.

So, what to do? First, don’t be too hasty in getting rid of those costly COBRA benefits. It’s true that you can save dramatically on your monthly costs by purchasing an individual plan – however, don’t be surprised if those repeated trips to the back specialist following a car accident years ago are trudged up and haunt your search. Make certain to shop your health insurance around to various carriers or ask for a “pre-screen” if you have a questionable health history. This is simply a slimmed down application that will go to an underwriter and let you know if you will qualify for coverage, without the stain of a denial on your history. If you are determined to be uninsurable, you can keep COBRA for 18 months and then transfer to a HIPAA plan after the COBRA plan expires. Remember though, HIPAA plans are only available to those who fully exhaust all 18 months of COBRA!

In addition, the benefits available on the individual market may not compare to those you currently receive on COBRA. Deductibles, coinsurance and prescription coverage’s are often far better on employee benefits plans. A plan on the individual market with similar benefits may in fact cost just as much as your current COBRA plan. So make certain to compare all aspects of the plans you’re comparing and do some serious examination of your needs.

If you do want an individual plan – here are some tips for reducing your costs:

  • Don’t fear a higher deductible. You can still get other “deductible waived” benefits, such as doctor office visits at a low copayment – but with the lower monthly premium of a higher deductible
  • FEAR a higher out of pocket limit. This is the number where your financial liability inside of 1 year ends. Find a plan with a comparatively low OOPM (Out of Pocket Maximum).
  • Only use In-Network physicians and hospitals.
  • If available, & your doctor okays it – opt for the Generic drug.

If you don’t have COBRA or HIPAA to rely on, prospects can become more difficult. However, there are options with State high risk pools or other guarantee issue products. Consult a professional and discuss your options.

Once our 60 year old friend hits age 65 Medicare kicks in and costs will become more manageable – however, not insignificant. (Think $110/mo. for Part B, $50-$200 for a Medicare Supplement & $60 for a Part D Rx plan) The good thing is that there are open enrollments and guarantee issue, so no more worrying about underwriting. Therefore, the interim insurance is more of a “bridge to Medicare”, rather than a long term solution.

In conclusion, if you find yourself in health insurance limbo, make certain to evaluate all aspects of your current plan, your needs and the plan benefits you’re considering. Apply first and cancel your COBRA only after you have an acceptance and new insurance cards in hand. In doing so, you will go a long way to avoid being caught uninsured and placing your financial well-being at risk.

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