Even under current law, it's possible to find coverage for you and your family, usually at a reasonable cost. Options to consider if you need health coverage but are too young (under age 65) to qualify for Medicare...
COBRA/STATE PLANS
For people who recently have lost group coverage, a smart choice may be to purchase a policy under COBRA, the temporary health benefits provision of the Consolidated Omnibus Budget Reconciliation Act of 1986. According to the rules, you can continue to be covered under your employer's insurance for up to 18 months at up to 102% of the former policy's expenses, depending on your circumstances. This amount includes both the employee and the employer's share, if your employer splits the expense with workers, as many do. (The extra 2% is for administrative costs.) COBRA usually is available only from companies that have at least 20 employees. (Your spouse and dependent children can be covered for up to 36 months.)
Paying the full tab can be a shock to someone who is accustomed to having an employer pick up most of the cost of insurance. However, while COBRA policies often are more expensive than those purchased privately on an individual basis, they usually have more comprehensive benefits.
What to do: Apply for COBRA through your previous employer. To get more information on COBRA, contact the US Department of Labor's Employee Benefits Security Administration, 866-444-3272.
Helpful: Many states require smaller companies and others not bound by COBRA to offer some type of continuation of coverage to employees. For a database on health-care coverage options by state call 703-276-0220.
INDIVIDUAL POLICIES
Individual insurance is regulated on a state-by-state basis. You must buy a policy sold in your home state. Rules for individual health insurance outside a group plan vary among states.
*Medical underwriting. In the vast majority of states, insurance costs are based on the applicant's health status. He/she will be assigned a rate class by the company and put into a pool with similar individuals who will be charged the same premium. Also, many states allow health insurers to issue elimination riders to people who have preexisting medical conditions. These riders allow you the option of picking a policy that covers all conditions or a less expensive policy that excludes certain preexisting conditions.
*Pricing based on guaranteed issue/community rating. "Guaranteed issue" laws state that a health insurance company cannot reject you for coverage based on any preexisting medical condition. Community rating laws say that everyone in the same geographic area pays the same price for coverage, regardless of age or health. It may be easier for people with medical problems to obtain coverage in states with such laws, but there is a price involved.
These laws make individual coverage in the state more expensive, on average, because insurers do not have the medical information to appropriately spread risk among the applicants. In these states, healthy young people are much less likely to purchase coverage. This makes coverage more expensive for those who do buy it.
Examples: A healthy, 25-year-old man living in the New Jersey suburb of Haddonfield could pay $467.16 per month for a comprehensive individual policy with a $1,000 deductible. If he lived in Pennsylvania in the suburb of Wayne (20 miles away), then he could buy the same policy for only $58.86 a month. A healthy, 60-year-old man in Wayne would pay $289.82 for that policy. A man of the same age living in Haddonfield would be charged the same $467.16 a month that the 25-year-old pays for the plan. These vast price differences are due to the community rating and guaranteed issue laws affecting individual insurance in New Jersey.
*Using rates obtained from eHealthlnsurance. All rates are subject to change.
What to do: Purchase private coverage from an independent health insurance agent licensed in your state.
HEALTH SAVINGS ACCOUNTS
For a tax-efficient way to pay for individual health insurance, consider a health savings account (HSA). You must choose a policy with a high insurance deductible - at least $ 1,000 for individuals ($2,000 for families) up to a maximum of $2,700 for individuals ($5,450 for families) as of 2006. Every year, you make your tax-deductible contribution up to the amount of the deductible. You withdraw money from the account to cover out-of-pocket medical expenses.
For people who create HSAs but don't need to tap them, the accounts can function like individual retirement accounts. The money can be invested to grow tax-deferred. After age 65, you can withdraw the money for any reason, but you will have to pay income tax if it is used for non qualified expenses.
COVERAGE FOR SERIOUS MEDICAL PROBLEMS
In most states, you can be turned down for individual coverage if you have a serious medical condition (e.g., HIV or cancer). Fortunately, most states have developed some way to provide hard-to-insure people with access to private individual health insurance coverage.
Thirty-three states provide high-risk pools. You can apply for high-risk pool coverage through an insurance agent or directly to the state. Coverage costs more than private coverage because all the people in the pool have serious medical problems, but the rates are capped, usually between 125% and 200% of the average individual market premium. For instance, in a state where a healthy person pays $100 a month, someone of the same age in the risk pool might pay $150.
Twelve states use other means of providing hard-to-insure people with access to individual coverage (for instance, requiring coverage through a designated health insurance company of last resort). Five states - Arizona, Delaware, Georgia, Hawaii and Nevada - offer no individual coverage options for those who are hard to insure.
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