Unemployment & Health Insurance

Loss of employment also means losing eligibility for group health insurance plans. Both the government and insurance companies offer solutions to help unemployed workers maintain health coverage, but many of these options come at a high cost.

Considerations

• Most recipients of employer-sponsored group insurance are protected by federal and state laws prohibiting insurance companies from denying coverage or exceeding limits on premiums. In the private individual insurance market, providers have more freedom to determine rates and benefits, and can deny coverage to individuals with poor health.

Continuation

• Federal Consolidated Omnibus Budget Reconciliation Act (COBRA) laws provide eligible individuals the opportunity to receive continuation coverage for up to 18 months. Benefits offered with a COBRA plan reflect the applicant's prior coverage, but the policy holder pays the entire cost of monthly premiums. Federal COBRA laws typically apply to groups of at least 20 employees, but several states have implemented mini-COBRA laws for smaller groups.

Temporary

• Short-term plans provide a temporary solution in between jobs. Depending on the provider, a short-term plan lasts between six months and one year and offers limited benefits, focusing on unexpected rather than pre-existing conditions.

Conversion

• Conversion plans offered under the Health Insurance Portability and Accountability Act (HIPAA) allow qualifying unemployed workers to select coverage with similar benefits to the group plan. While HIPAA laws prevent insurers from denying coverage based on health and other factors, premium rates on conversion policies are not usually regulated.

Transfer

• Married individuals who are not anticipating new employment can consider joining a spouse's insurance plan if the provider allows it. This option means increasing the overall cost of the plan, but provides a less expensive alternative to obtaining individual coverage.