Worried about losing your job? Better start checking out insurance
By Gail Appleson
ST. LOUIS POST-DISPATCH
Thursday, Aug. 06 2009

Ryan Lemmon had been a regional operations supervisor for financially troubled Bally Total Fitness when he was laid off in October. Along with his job, Lemmon lost his health insurance.

"I didn't want to take COBRA. It's ridiculous. It was like $500 a month. It was way too expensive," said Lemmon, 34, of St. Louis.

So he began asking around, and one of his self-employed friends referred Lemmon to her insurance agent.

"I found out that it's not that expensive," Lemmon said. "All I needed was coverage in case of an emergency and something that would keep me out of bankruptcy. I don't need all those perks."

So Ryan chose a 30-day policy from Anthem Blue Cross and Blue Shield in Missouri that he renewed several times until he found a new job. Lemmon said he paid about $60 a month and had a $250 deductible.

Lemmon's situation is becoming all too frequent as more Americans lose jobs in this tough economy. Employers reduced their payrolls by 467,000 jobs in June, far more than forecasters had expected. The unemployment rate rose to 9.5 percent in June, from 9.4 percent.

The shock of losing a job is bad enough, but it also means the end of employer-provided health insurance. Some workers even lose their insurance the
same day they're laid off.

When employees lose a job at a company with 20 or more workers and they've had insurance benefits through their employer, COBRA can be an option. But COBRA is very expensive, even with a government subsidy being offered this year.

Depending on the situation, a healthy laid off worker like Lemmon might qualify for cheaper policies in the individual insurance market. COBRA, which gets its name from the Consolidated Ominbus Budget Reconciliation Act of 1985, was created to provide continuation of health coverage at group
rates for individuals who have lost their insurance under certain circumstances. However, the rates that a consumer pays under COBRA skyrocket
because their former employer is no longer footing a big chunk of the premium.

AVOID COBRA IF HEALTHY

In fact, employees can be required to pay up to 102 percent of the monthly premium.

If you have a pre-existing medical condition or if you're pregnant, COBRA might be the only alternative.

"But if you're healthy, you'd never want to step foot on COBRA," said Pat Weaver, an independent insurance broker with Charter Financial in Wildwood. "You can usually pick up a short term plan for half of that."

Insurance experts suggest that people employed in troubled industries should at least start thinking about their options in the event they suddenly lose their jobs. Having a strategy in advance will help reduce the stress and emotional turmoil that goes along with a termination.

"It doesn't take much to get your head spinning," Weaver said.

'STICKER SHOCK'

The same advice applies to young adults who will no longer be covered under their parents' insurance plans, workers switching jobs who will not have benefits for 30 days or longer and early retirees awaiting Medicare eligibility.

"There's sticker shock when you're faced with paying for it yourself. So we tell consumers to shop around," said Ellen Laden, a spokeswoman for UnitedHealthcare's Golden Rule Insurance Co. subsidiary. "There is a robust individual market out there with a wide range of plans."

Some research groups say just how robust that market is really depends on how healthy you are and how much money you can spend.

"You can really have problems finding an affordable plan," said Michelle Doty, an author of an individual insurance market report issued last month by The Commonwealth Fund, which supports research on health care issues. She said the findings showed that individuals pay more and get less when they have to buy their own health coverage instead of getting it through an employer-based plans.

The report said that 57 percent of adults who shopped for coverage in the individual market found it very difficult or impossible to find a plan they could afford and 36 percent said they were turned down or charged a higher price because of a pre-existing condition. The findings were based on Commonwealth's 2007 biennial health insurance survey that examined adults ages 19 to 64 who tried to buy health insurance between 2004 and 2007.

The report found that 73 percent of respondents never ended up buying a plan and 61 percent of them said it was because premiums were too high.

"These findings indicate that the individual insurance market in its current form does not provide a viable alternative to employer-based group coverage," the report said.

But consumers like Lemmon were pleased with what they found in the market, and insurers say shopping around is fairly easy to do. One way is to call an insurance company agent or an independent broker who can provide comparison rates and features. Either way, there is no fee. Speaking to an agent or broker is a particularly good avenue if a consumer and his or her family have complex needs.

Plenty of information is available online. Major insurance companies have websites that let you calculate the costs of buying your own insurance, and brokerage sites let you compare plans from various insurers. For example, ehealthinsurance.com, a major online broker, has partnerships with more than 185 insurance companies so consumers can compare numerous plans. The site also provides information about COBRA and allows consumers to calculate their subsidized premium and compare it to individual and family health plans in their ZIP codes.

SHORT-TERM PLANS

Consumers shopping for coverage can consider whether they want a longer, renewable plan or a short term, also called temporary, policy.

Short term plans differ because they are only for a limited period, usually one to 12 months and in most cases a consumer can get coverage within 24 hours. Unlike long term insurance, short term health insurance plans do not require a lengthy "underwriting" process in which an insurer determines how much risk an applicant represents, how much coverage the insurer will offer and what the applicant's premium should be.

The demand for short term plans has increased so much that UnitedHealthcare's Golden Rule introduced two new products just within the last few months, Laden said.

The products, which have deductibles ranging from $250 to $10,000, are designed to bridge gaps in health insurance coverage. Consumers can calculate costs for both short term and standard policies by visiting www.goldenrulehealth.com.

"But a short term policy isn't always the best fit especially if the next phase is unknown. It's not really for people who have no idea when they'll be working again," said Wendy Wiederhold, director of sales at Anthem Blue Cross and Blue Shield in Missouri. "You really need to know about how long you'll need coverage. If you don't know, it's better to go to a long term policy."

'DON'T GO UNINSURED'

Consumers can get quotes on Anthem's short term and standard policies by going to anthem.com.

Regardless of the type of plan chosen, consumers should make sure they don't have a break in coverage. They shouldn't drop a plan until their new plan becomes effective, Laden advised. "Whatever you do, don't go uninsured. There are plans available that meet your health care needs and still fit into you budget."