The Recession Hurts – Buying Health Insurance While Unemployed
With the recession upon us, unemployment has become a reality and is at an all time high. The media and organizations are getting information out to the public on how expensive health insurance can be when combined with unemployment income, or the lack of income. It is so true that health care costs are on a rise, even more so when you elect to take on the expense of COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986). Fortunately, there are other options families have to choose from. Health insurance is a necessity, like food and shelter. It is not worth the “cost” of not having health insurance. With COBRA being at the high expense that it is, most people move to alternative means of healthcare, such as a Short Term Medical (STM) or their own private health insurance plan.
There is the argument that if you have a pre-existing condition you will not be able to get any coverage or have to settle for lack of coverage. This is true; if you have one of over 150 conditions out there you can become uninsurable. You will not be able to buy coverage on your own outside of the high-risk pools. COBRA has its downsides when it comes to pre-existing conditions as well. However, the most common conditions are usually covered, as well as many other conditions that could be covered, only if you work with the right health insurance agent. A truly independent agent has the ability to develop relationships with multiple carriers along with the ability to converse with them to see what the probable outcomes are. Some of my best clients are still amazed that I was able to get them coverage, often times better than what they had before despite the pre-existing condition.
Another option for families who are on a tight budget is taking on a Short Term Medical (STM). Basically, you are renting a health insurance policy for catastrophic, only over a short period of time. The health insurance companies give you a break on the price because:
1) The policies expire at a maximum of 6 months with an option to renew.
2) They may only provide a discount for the minor things such as, but not limited to:
- Doctor Visits
- Lab Work
- Rx coverage
The downsides to having an STM are:
1) Like COBRA, the policy eventually runs out. If you develop a health condition while on the policy and you need to continue treatment, the insurance company may turn down the renewal.
2) If the condition is on their list of conditions that are uninsurable, even if the treatment is over, a policy would not be offered for that individual.
From my experience, I can tell you that it is much safer to provide your family with more permanent coverage such as a private health insurance policy. The policy can never cancel on you due to health and usage of the policy. It will also never expire on your family. This way if you move to a new employer that does not provide health insurance benefits for your family, or if you start your own business, you can still buy more catastrophic health insurance (such as a Health Savings Account (HSA) Plan) to keep premiums more affordable and have more coverage than an STM.
The lack of health insurance can cause major problems. Far too often the uninsured delay the needed medical attention. As a result, adults can wind up with conditions that otherwise could have been prevented. The flip side is if you end up seeking medical attention, many people end up in debt over it.
There are a couple of things you can do to have permanent insurance more affordable for your family. The first you have to do is ask yourself what is the most important thing for you to insure. This is a very good question to ask. Some people may claim going to the doctor is the most important thing for them, however you cannot buy health insurance to cover just doctor visit co-pays. There is a reason for that. We don’t buy health insurance to save $70+/- at the doctor. We would buy insurance for the big expensive claims. To make it more affordable you may have to go with a high deductible. The good news is you don’t need your deductible in cash at the time of claim. The facilities are usually reasonable with payment plan options to make it more affordable for your family. Having $5k-10K out of pocket if something happened to your family is much better than having $100,000.00 bill hanging over your head for not having insurance.
Your employer is in complete control of how they distribute your health insurance coverage. This is one of the contributing problems when you become unemployed. They can make changes to the policy (i.e. deferring more cost to the employees), do away with the health insurance all together or lay you off. Unfortunately, you do not have a say so unless you are the owner or on the board of directors. It seems the problem starts when unemployment hits. In the world of health insurance, many of these problems can be prevented if families just took advantage of buying their own private health insurance policy. This way if you are employed or not, it is not a reality check. In fact, it is already factored into the monthly budget, right? You have control of the benefits by choosing the plan that best fits your needs, your wants and your budget. Work with an independent agent to be sure you have all the options.
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