Insurance Options for the Unemployed

In 1995, Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA), a law that gives employees the right to continue their group health insurance coverage in the event that they lose their group coverage. This health insurance allows you to retain your group health insurance in the event that you lose a job with benefits.

COBRA used to be an expensive option for many people, but since the recent stimulus package was passed, the dream of affording it has become a reality. If you’ve lost your job between September 1, 2008 and December 31, 2009 and are eligible for COBRA health insurance, you’re only on the hook for 35% of the costs of your health insurance instead of the past 102% it used to cost. The other 65% is still paid for by your employer, who is reimbursed in the form of payroll tax credits. This subsidy is only available for the first nine months of unemployment.

COBRA is still not a long-term solution, so we recommend looking into purchasing private health insurance plans.

If you decide to look for private health insurance, there are a few things to be aware of:

•A private health insurance policy with the same benefits as a group policy will be more expensive than that group coverage;

•Group insurance is required to provide certain maternity benefits while private health insurance is not. Make sure to look in depth at the maternity benefits on a new policy;

•If you have any pre-existing medical conditions your options for private health insurance are going to be severely limited. In this case, COBRA is probably your best option.

Lastly, if your husband or wife is employed, considered the possibility of adding yourself to their policy. This may end up being the most affordable option.