When COBRA strikes: How to maintain affordable health insurance

For those joining the ranks of the unemployed, the prospects for health care coverage can be frightening.

Enacted in 1986, COBRA's high cost is a contributing reason why 47 million Americans are uninsured — a figure in a report from Families USA.

"There are some misconceptions about COBRA," said Ellen Laden, spokesperson for United Healthcare Golden Rule Insurance, one of the two largest health insurers in the country that offers medical plans for unemployed. "If you never had to use it, you don't know. In today's economy, more and more people are finding themselves losing jobs or losing benefits or are covered by health insurance, but their families no longer are."

To be eligible for COBRA coverage, an employee must have been working for a company of 20 or more. Employees laid off from smaller businesses are not eligible. Also ineligible are those who have worked for companies that have dropped medical coverage or have closed suddenly.

"One of the problems with COBRA is it tends to be expensive," said Laden from her office in Indianapolis. "It costs up to 102 percent of the cost of health insurance (for family coverage)."

COBRA premiums vary from state to state, and Laden said cost can be computed at three or four times what a worker had been paying each month for the medical coverage at that job. That means if you had been paying $100/month, depending upon your employers benefit program, your COBRA could be as much as $300 or $400/month.

Employers often pay 75 percent of health insurance costs, and large employers pay even more. Many who leave a company and its coverage are not ready for the sticker shock once they have to pay for their own coverage.

So, consumers should shop around with a broker (you can call me for help at 888-943-3336), before resorting to the popular course of action with COBRA.

But there is one time when COBRA becomes the preferred alternative, said Laden: people who lose employer coverage and have serious pre-existing conditions or chronic illnesses.

"That prevents them from getting coverage in the ordinary market. It is important for those people to continue coverage under COBRA for as long as they can," said Laden.

Once COBRA coverage is exhausted, insurees become eligible for HIPAA — Health Insurance Portability and Accountability Act. Enacted in 1996, it guarantees coverage for that 10 percent of the population who cannot get affordable alternatives in the individual market after COBRA.

Many policyholders can mix and match coverage, taking COBRA for themselves if they have an ongoing medical condition but picking up less involved coverage for their family members. The main thing is that different people have different needs for coverage and for their budget, and those two things must be considered when deciding on a policy.

"There's no one right plan for everybody. Every family has unique needs. You need to be a good consumer. The most important thing is no one should be without health insurance coverage," said Laden. "Options are available for health care and budget needs. It's tempting, when the budget is squeezed and there's no revenue, to let health insurance go. But you can get an injury that is serious and needs hospitalization, and that cost can put you into bankruptcy. You may never be able to pay it off."

Once again - if you find yourself in these circumstances, give me a call at 888-943-3336.

Generic Drugs vs. Brand Name Drugs... Who Cares?

First of all, why should you care? Because you can save a boatload of money, that's why!

This is where the big bucks are. If you take one pill a day and the brand name drug is $3 a pill (yes, that's realistic). In one year, you'll spend $1,095 for that one medication. A generic drug purchased at Wal Mart with no health insurance will cost you $4 for 30 days - that's $48.00 a year - a $1,046 savings.

What's the bottom line? Here's some comments from a recent study: "...the research reconfirms that FDA-approved generics provide the same medicine with the same clinical effects at a substantial cost savings." The results of 30 studies done since 1984 comparing nine sub-classes of cardiovascular drugs to generic counterparts were combined and showed that brand-name drugs did not offer any advantage for patients' clinical outcomes (Journal of the American Medical Association).

So! Take the kids out on the town or the family out to dinner once a month and use generic drugs whenever possible.