What Happens When You Lose Your Health Insurance?

When you lose your health insurance, you are responsible for covering the cost of your medical expenses. Doctor's visits, emergency care, surgery and prescription drugs must be paid completely out of pocket when there is no health insurance available to subsidize those costs. Job loss or pre-existing health conditions may cause a person to lose their health benefits. Individuals who lose their insurance may choose to remain uninsured or take advantage of other options to obtain coverage through other means.

COBRA

• Many employees lose their health insurance because of a job loss, layoff or reduction in work hours. The Consolidated Omnibus Budget Reconciliation Act (COBRA) is available to employees who lose their health benefits due to these types of events. It allows employees to continue their health benefits for a maximum of 18 months or until the employee obtains another form of insurance. Benefits are available to the employee as well as his or her beneficiaries including a spouse, dependent children and other relatives. The employee is responsible for paying the premiums associated with COBRA coverage which, in many cases, is considerably higher than what was paid with employer-sponsored benefits. Employees also have the option to convert COBRA coverage to an individual health insurance policy as well.

Federal Health Insurance Plan

• The federal government has enacted an insurance plan to cover individuals who are unable to obtain health insurance through traditional means. The Pre-existing Condition Insurance Plan (PCIP) is available to individuals and families who have been turned down or unable to receive insurance because of an existing health condition or disability. The PCIP plan is offered through state health departments or the federal Department of Health and Human Services if a program is unavailable in a particular state.

State Insurance Pools

• State insurance pools provide health insurance plans to individuals who are considered high-risk. These individuals have either lost their private insurance or are unable to obtain insurance in the private market. State insurance pools typically have higher premiums than private insurers because they cover participants who are high risk. These participants usually have conditions such as heart disease, diabetes, cancer or other illnesses. State plans do not exclude these conditions but individuals looking for coverage will have to meet certain eligibility requirements to obtain coverage.

Other Individual Plans

• If you lose your health insurance coverage through one company, you have the right to apply to another insurance company. Each health insurer has different underwriting guidelines. Perhaps the circumstances that caused you to lose your health insurance with one company are acceptable to another.

  If you are unable to obtain a comprehensive health insurance policy because of an existing health condition, several insurers offer limited indemnity insurance policies that are not a part of state or federal insurance pools. These policies provide health coverage for a wide variety of circumstances and conditions. Most limited indemnity policies do not require a statement of health or physical exam and many guarantee insurance coverage. Limited indemnity policies provide basic care such as emergency room and ambulatory care, preventative care, surgeries and dental coverage. Several plans are available depending on the needs of the individual.