Maintaining Benefits Through the Recession: Health Coverage

With the unemployment rate growing and news of pending layoffs increasing each month, it’s only natural to worry about your job security – and with that comes the concern that if you do leave or lose your job your current benefits will go down the tubes along with your steady paycheck. Here’s a step-by-step guide to navigating the transition and maintaining your benefits as best as you can in these trying economic times. In the first part of this series, we’ll examine health coverage options.

Understanding COBRA
You employer is paying a large portion of the premiums on your health care plan, and it’s likely that you won’t be able to afford the same coverage if you are no longer working. According to the Consolidated Omnibus Budget Reconciliation Act of 1985, (COBRA) almost all employees are eligible to continue their current health coverage by paying the full cost of their insurance premiums for up to 18 months after termination of their employment. While this may be a possibility for some, it is not necessarily the most cost effective route for maintaining benefits through a period of unemployment. For example, while employed I was paying about $100 per month for my medical plan, but would have had to pay almost $400 per month to continue the same coverage under COBRA.

It is essential to note that if you have been diagnosed with a pre-existing medical condition that requires regular treatment, you should never allow a gap in your medical coverage. While COBRA may be your only option for continuing coverage after a sudden termination of employment, there are some things you can do to prepare for this situation and save yourself some money.
Investigate individual plans before you lose your job. Start with your present health care provider, since you most likely already use doctors and clinics within their network. Do they offer an individual plan similar to your present plan? Is the monthly premium around what you are paying now? You may want to shop around and compare rates with a few other vendors, just to see what your options are. Keep all of this information handy. In the event of a sudden termination of employment (and benefits) you can apply for coverage to begin as soon as your employer’s benefits terminate.

If you’d prefer to maintain the exact same coverage, no matter what the cost, you should go with the COBRA plan. The information you need to extend your benefits under COBRA will be mailed directly from your health care provider, so ensure they have your mailing address correct at all times. Typically, you have between 30 and 60 days from the termination of your benefits to extend coverage and send payment. It is wise to double check that the coverage date begins when your employer’s benefits terminate. If you plan on being unemployed for longer than the 18 months coverage period, you may need to start shopping for a new plan once that window starts to draw near.