How to Get Health Insurance if You’re Unemployed
by www.SixWise.com

Since the beginning of the recession in December 2007, nearly 6 million jobs have been lost. Now, the unemployment rate has reached nearly 9 percent as of April 2009, according to the Bureau of Labor Statistics.

However, that 9 percent does not account for the over 2 million Americans who are called “marginally attached” to the labor force; they were not included in the statistics because they had not looked for work in the four weeks preceding the survey.

What this means is a significant portion of the U.S. population is now without a job -- and the health benefits their job once provided.

So amidst the many emotions that come from losing your job, many are now also having to struggle with how to find and pay for adequate health insurance coverage, a task that can be quite daunting.

What is COBRA, and Does it Really Help?

In 1986, the Consolidated Omnibus Budget Reconciliation Act (COBRA) offered health benefit provisions for the unemployed. According to the Act, a terminated employee has the right to maintain the same health coverage they had while employed, but now must pay for the costs.

This is a great program in theory because it guarantees you will be approved for coverage. Employers with 20 or more employees are required to offer COBRA as long as they offer health coverage, and it’s typically available for 18 months after a job ends. In some states, even employers with fewer than 20 employees offer a similar health insurance option to COBRA.

However, COBRA may not be a practical option for many families due to the high costs involved.

"COBRA health coverage is great in theory and lousy in reality," Ron Pollack, executive director of health insurance reform advocacy group Families USA, said in the Los Angeles Times.

According to their report, the average national cost of COBRA coverage amounts to 30 percent of unemployment benefits for an individual and nearly 84 percent for a family. In all, a single person can expect to pay an average of $400 a month for COBRA benefits, while family coverage costs an average of $1,078 per month, according to the Kaiser Family Foundation (KFF).

Often, these costs are too steep for those out of work, but there is some good news. According to KFF, the government stimulus package has made available subsidies for COBRA, so that those with COBRA will receive a 65 percent subsidy on premiums for up to nine months, bringing the average costs down to $140 a month for singles and $377 for families.

What Other Options Are There?

If possible, see if you can be added to your spouse’s health insurance plan. This is likely to be much less expensive than COBRA. If this is not an option, shop around to see if you can find an insurance plan for less than COBRA.

If you are young and healthy, you may very well be better off using a high-deductible plan than a comprehensive COBRA plan. However, keep in mind that many insurance companies will not cover pre-existing conditions, so if this is a concern for you then COBRA may be the best choice.

Some insurance companies also offer low-cost unemployment health insurance, which will at least cover you in the case of an unexpected illness or injury.

You can also look into public programs, particularly those for your kids. Most states offer low-cost health insurance options for kids, often regardless of parents’ income. In Illinois for example, the All Kids program offers comprehensive healthcare that includes doctors visits, hospital stays, prescription drugs, vision care, dental care and medical devices like eyeglasses and asthma inhalers. Parents pay monthly premiums for the coverage, but at rates that are significantly lower than they are on the private market.

For instance, a family of four that earns between $42,000 and $63,000 a year pays a $40 monthly premium per child and a $10 co-pay per physician visit.

Once your children are covered, you can then opt for COBRA coverage for just yourself and/or your spouse, which will cost much less than family coverage.

Low-income families can also apply for Medicaid. However, even if your income is low because of a layoff, if you have other assets such as a house, a life insurance policy with cash value, or any other types of savings or investments, you likely will not qualify.

Finally, even a bare-bones insurance policy that covers catastrophic injury or illness is better than nothing, but if you cannot afford health insurance of any kind, take advantage of community clinics and health centers in your area. Many offer health care services on a sliding scale, based on what you can afford to pay.

Recommended Reading 

Universal Health Care: What's the Debate All About?

How Much Insurance Should You Have ... for Home, Auto, Health and More 

Sources

Bureau of Labor Statistics May 8, 2009

SmartMoney.com May 6, 2009

Los Angeles Times January 19, 2009

ConsumerAffairs.com November 17, 2008