Health insurance quotes and losing your job

What is the problem?

It is a fact of life that, if you bring a group of people together for insurance purposes, they pay less than they would as individuals. Now add in the employer’s contribution as part of the remuneration package, and a group plan is usually significantly cheaper than would ever be available to an individual. Should the employer cease trading or employees lose their jobs, this deprives them of very cheap cover at a time of economic distress.

What is the solution?

It is an irony that the President responsible for protecting employees who lose their jobs is Ronald Reagan. He is not someone you would immediate associate with labor rights but, thanks to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), people who are terminated involuntarily can continue membership of the group plan for up to eighteen months.

Does it work in practice?

Although some employers subsidize the COBRA payments as part of the termination package, most employees cannot afford to continue the cover. So, for example, in 2006, only 10% of employees who were eligible actually took up the option. At that time, the economy was in good shape and there was a good chance of finding other employment. So either the new employer offered a health plan, or there was enough money so that, after searching the market with health insurance quotes, a replacement policy could be found. But when the recession hit, finding alternative employment became very difficult. So, President Obama produced the American Recovery and Reinvestment Act of 2009 (ARRA). This subsidized the COBRA payment by 65% for up to fifteen months so long as:

• the loss of employment was involuntary;

• the employee was eligible for COBRA;

• there was no alternative group plans available; and

• the employment was lost between September 2008 and June 2010.

In 2010, this was modified to include those who were forced to work short time before termination. But, following the arrival of more Republicans in Washington, ARRA has become a lame duck. This has forced employees back on to the original COBRA program. If this applies to you, your only option is to get health insurance quotes from all the reliable insurers in your state. If the premium rates are higher than the COBRA payments, COBRA will be the only viable option unless you qualify for Medicaid.