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COBRA insurance plan can cover job transition

The (Wilmington, Del.) News Journal

Being between jobs can be stressful enough. Because most people get health insurance through their workplace, being between jobs can also mean going without health insurance. That can double the stress.
Compounding the problem, most employers impose a waiting period before a new employee is eligible for health insurance. The average wait is 1.6 months, the Kaiser Family Foundation says. But for lower-wage jobs it can be much longer.

Add that waiting period to the time spent job-hunting, and it can mean many months spent walking the tightrope. So - how to keep your body whole without paying an arm and a leg?

Many people are aware of so-called COBRA plans. Since 1986, companies employing 20 or more people have been required to offer insurance for up to 18 months.

A COBRA plan can be useful because "it's guaranteed, it's seamless and it's the same coverage you already have," said Paul Fronstin of the Employee Benefit Research Institute in Washington, D.C.

COBRA is especially valuable for people with pre-existing conditions who may be unemployed for a long period, said Fred McMinds, vice president of Newark, Del.-based insurance company The Benefit Group.

Employers do not contribute to COBRA plans for their former employees, so employees must pay the entire cost of their group premium. That can mean hundreds of extra dollars a month.

"Once you go on COBRA, you've got to pay the full freight, and people get sticker shock," McMinds said.

Workers on COBRA plans pay an average of $314 per month for individuals and $845 per month for families, according to an analysis of numbers provided by the Kaiser Family Foundation.

The cheaper alternative is known as short-term health insurance. This bare-bones insurance is for generally healthy people because it doesn't cover pre-existing conditions. The plans usually cover physician services and hospital stays but not preventive care, immunizations, dental or vision.

The application for short-term insurance is brief, and coverage starts immediately. The plan can cover an entire family for up to 12 months. Best of all, it's "cheap, cheap, cheap," McMinds said - about $50 a month for a healthy 34-year-old.

The vast majority of employers neglect to tell departing employees of COBRA alternatives such as short-term insurance, said Robert Guilbert, spokesman for Assurant Health, a Milwaukee, Wis.-based company that offers short-term plans.

Employers, who are legally obligated to tell employees about COBRA, may simply not bother to tell them about alternatives, or may be afraid of legal consequences if they steer employees to the wrong kind of insurance, Guilbert said.

Ellen Laden, spokesperson for Indianapolis-based Golden Rule Insurance, which specializes in individual policies, says more low-cost options in individual policies have emerged in recent years.

They include high-deductible, bare-bones plans and the new federal Health Savings Accounts plans.

Such plans combine a high-deductible insurance with tax-free, interest-bearing accounts for health expenses.

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