COBRA Alternatives Save Money

Most people have no idea what COBRA means. Congress enacted the Consolidated Omnibus Budget Reconciliation Act or COBRA to protect people in the event that they face the loss of health insurance coverage when changing jobs, after the death of the eligible employee, after divorce, or some other life altering event. COBRA is not health insurance. It is simply a law.

Once a person becomes eligible under COBRA, they have 60 days to make a decision about whether they want to continue coverage or not. If they decide they want coverage, COBRA allows them to continue coverage under their former employer group health insurance plan for up to 18 months. Premiums can be as much as three times the amount they paid while employed because the former employee is now responsible for 102% of the premium cost. Most of the time, it is prohibitively expensive. Maybe that's why only 20% of eligible people elect to continue their health insurance benefits.

Fortunately, there are alternatives that can save people money. Health insurance agents have many different options they can present to people seeking health insurance. They are licensed professionals who are educated and experienced in dealing with healthcare insurance questions on a daily basis.

Here are just a few options that are available:

· Aetna is one of the largest insurance companies in the United States. They offer health insurance coverage in many different states. Aetna has group plans customized for the differing needs of the employers that buy group health insurance through the company. The cost and plans vary significantly depending on individual state laws and business needs. Aetna does business in the private sector as well.

· Blue Cross and Blue Shield are two names that are widely recognized around the United States. They offer health insurance to both companies and individuals. Because they are nonprofit companies, the rates are usually much more competitive than those offered by other companies.

· Short-term health insurance can be a very viable alternative for those who are in between jobs. Often, people are without insurance for only a brief period of time. Once they get a new job, they will be eligible to enroll in the group health care plan offered by their new employer. Short-term health care insurance is sold by many different companies and can be purchased by individuals through an independent health insurance agent. Coverage on these plans is usually very affordable, but does have its limititations.

Obviously, people need to seek the services of a professional licensed health insurance agent that does business in their state. They can provide free quotes and valuable information to help people make the right health care decisions relevant to their own unique situations.

COBRA Alternatives May be Necessary if COBRA Eligibility is in Question

There are certain eligibility requirements that must be met in order for a person to qualify for COBRA benefits. The Consolidated Omnibus Budget Reconciliation Act was enacted by Congress to protect people from losing health insurance due to the loss of a job, the death of a sponsoring family member, a divorce, the death of the sponsoring family member, and other life altering events that are deemed eligible.

Usually, if a person leaves a job, they have the right to purchase health insurance on the group plan sponsored by their employer for up to 18 months, due to the provisions of the law under COBRA. The employer is required to notify the former employee of the cost of their insurance premium in writing. Employers also give a verbal explanation at the exit interview.

There are some cases where people find out that they are not eligible to receive extended health benefits under COBRA provisions. The people affected are unpleasantly surprised when they discover their status, if ineligible. If a person discovers he or she cannot receive benefits under COBRA, there are other options that are available and they must act quickly because time is of the essence. Most insurance companies will not cover pre-existing conditions if there is a break in coverage of more than 60 days, so it is important that if a person is recently separated from their job that they contact a health insurance agent so they can understand all of their options.

Here are a few of the situations that cause people to be ineligible for benefits under COBRA:

· The law only requires companies with over 20 employees to provide benefits under the laws governed by COBRA. Employees who work for companies that have fewer than 20 employees are not eligible for benefits under COBRA. If they leave their job or are terminated, they lose benefits at the end of the specified coverage period. In most cases, coverage ends at the end of the month the employee is terminated. People who fall into this category need to contact a private health insurance agent as soon as possible to purchase an individual policy.

· Many companies in this economic crisis are doing everything they can to eliminate expenses. Health insurance coverage for employees is a big expense for businesses. Employees should be aware that their company could cut health insurance benefits or eliminate them altogether. If that happens, the employee is not eligible for benefits under COBRA.

· Sometimes, people who are paying for continued health insurance benefits lose their eligibility when they miss a payment. The law states that if people fail to pay for their coverage at any time, they can lose their eligibility status. Although COBRA requires the insurance company to send out a cancellation notice when a person misses a payment, people do not always see the warning letter. That is why it is imperative for people to watch for any notices from their insurance company.

Advantages and Disadvantages of Not Using a COBRA Alternative

COBRA alternatives are necessary because the program costs more than most people can afford. This law exists to provide continued health coverage after an employee leaves a job. Coverage is only intended to be temporary. When a person is faced with the choice between purchasing private health insurance and continuing with group health care insurance through COBRA, they must act quickly because they have a 60 day window to enroll in the COBRA plan. COBRA is the acronym that is short for the Consolidated Omnibus Budget Reconciliation Act. This law protects people by allowing the individuals that are eligible to continue their group health care plan for up to 18 months.

Eligible people have a limited time to make their decision about whether to proceed with the plan under COBRA or to instead choose a plan offered through an independent health insurance agent. After 60 days, the person is no longer eligible to use the benefits protected by COBRA.

Here are the advantages of using the COBRA plan:

· Coverage is guaranteed for up to 18 months as long as premiums are paid on time without interruption. There is no guarantee that everyone can find coverage in the private sector. COBRA allows the covered person to continue the policy they had while working for their former employer without interruption. This removes any worry about spending time looking for an alternative to COBRA.

· Group health plans usually have a lot of bells and whistles such as low deductibles, high dollar coverage, and a long list of providers and conditions that are covered. Sometimes it is difficult to find similar choices with private health insurance.

· Pre-existing conditions are often excluded for at least 12 months on private health insurance plans. The length of time the exclusion continues depends entirely on the company. A person covered through their former employer's group health insurance plan does not have to worry about pre-existing conditions, at least while the coverage continues.

Disadvantages of continuing with the plan through COBRA:

· If a person misses a payment, coverage can be canceled. Once the policy is canceled, it cannot be reinstated. COBRA law requires the insurance company to send notices of nonpayment for cancellation; however, it is easy for a person to miss the notice, leading to an increased likelihood that the policy will be canceled.

· Premiums on a group health care plan are very high in comparison to private plans. The law requires that the covered person pays 100% plus a 2% penalty of all premiums. People often find that their premiums through COBRA are up to three times higher than private health insurance plans.

· COBRA is a temporary fix to a health insurance problem. The very fact that coverage is temporary can be a problem if the covered person finds a job that does not offer healthcare benefits.
Experts recommend that people find an alternative to COBRA as soon as possible to save money and to obtain a policy that is not temporary.

Advantages and Disadvantages of COBRA Alternatives

The premium costs for someone contemplating purchasing health insurance under the provisions of COBRA can be prohibitive. Perhaps that is why only 20% of eligible people choose to enter the program. Many of these people are living on unemployment compensation, which makes the idea of paying high health-insurance premiums seem completely out of reach. The people that do not opt in to the COBRA program choose to purchase private insurance plans, or choose to have no insurance plan at all.

The law does not give people much time to make a decision about whether or not they want to use their benefits under COBRA. They only have 60 days after employment separation before eligibility ends. Choosing to purchase private health insurance is a good option for most of these people.

Here are some of the advantages of using COBRA alternatives:

· Premiums are usually less expensive for private health insurance than for premiums under a COBRA sponsored plan. Saving money is important, especially for people who are surviving on unemployment compensation.

· People can choose from a variety of different health care plans. Health insurance agents often have a variety of plans available to people who need insurance. The options and prices vary from company to company. Shoppers decrease premiums by choosing plans with high deductibles and preferred providers.

· Health insurance agents act as liaisons and advocates between the health insurance companies and their clients. They can advise clients on coverage options that are suitable for their needs. Having someone to explain the ins and outs of complicated health insurance process is perhaps the best part of having a health-insurance agent.

Disadvantages of using COBRA alternatives:

· Policies may not have coverage that is as extensive as an employer sponsored health care plan. Conditions like prenatal care and pregnancy are sometimes excluded from private health insurance plans. Employer-sponsored plans usually cover these conditions.

· Private health insurance plans often have exclusions for pre-existing conditions. An employee who continues under their form employer sponsored plan usually does not have a problem with pre-existing conditions being excluded.

· Higher deductibles are common with private health insurance plans. This means the covered person will have to spend more out of his own pocket for certain conditions and treatments.

The disadvantages are relatively few for plans offered through the private sector. In fact, the advantages far outweigh the disadvantages for most people. Those who want to shop for a health-insurance policy need to act quickly to find an agent or company that suits their health insurance needs.

What If People Cannot Afford a COBRA Alternative?

The economy is in the worst situation in over 30 years and people who cannot afford expensive COBRA benefits need a COBRA alternative. Some say that things have not been worse since the Great Depression. Analysts expect the unemployment numbers to rise to levels of anywhere from 9 to 10% of the population. When anyone loses a job, finding a new position and surviving financially are most important on the list of priorities. Where does health insurance fit into this picture?

Budgeting health insurance premiums into a reduced paycheck can be difficult at best. Obviously, people need a place to live and food; however, one night in a hospital can end up costing several thousand dollars. This creates a difficult dilemma for those who are unemployed. Where do people go to find help? Here are a few options people can consider when faced with a difficult situation like unemployment:

· People need to look at their income and expenses. Putting it all down on paper can help a person identify if there is any money left in their budget to include a health insurance premium. If there is room for health insurance, that is good news.

· If there is any room in the budget for health insurance, seek the advice of a professional. Friends can be a source for referrals. Their advice can lead to meeting a trustworthy ally for insurance needs. Call the recommended agents as well as others. Contact professional associations who sometimes offer insurance at a discount. Check with the state Medicaid office to see if that is an option.

· Before meeting with any agent, decide what the priorities are for an insurance policy. Is it more important to have prescription drug coverage? Is there a need to cover doctor visits? Sometimes the most inexpensive policies cover catastrophic hospitalization for accidents and illnesses only.

· Set up a meeting with an agent. While there, make sure every question on the list is answered. The agent will discuss insurance needs based on the information presented to him or her.

· Possible options that can reduce premiums include temporary health insurance, higher deductibles, HMOs, and PPO plans. Temporary insurance policies last anywhere from 6 to 18 months. These policies often have several exclusions that permanent policies do not have such as pregnancy, but their main benefit is that they are inexpensive. Membership in an HMO or a PPO is usually less expensive than traditional insurance policies, yet they have good coverage for the price. Increasing deductibles reduces insurance premiums.
Ultimately the unemployed person is the only one who can decide what the best option is for his or her situation. The only option may be to go without health insurance, but only as a last resort for survival.