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What Happens to My Healthcare?

Part 1 of 2

What Do I Do?
One of the greatest anxieties that accompanies the loss of employment is concerns about where to turn for healthcare. COBRA, Affordable Care, maybe even just skip healthcare for a few months? Different scenarios run through your mind as you dread the hours of research and the high premiums ahead. You wonder if you or one of your kids might even get turned down for healthcare because of a pre-existing condition.

Legislation over the past 20 years has narrowed your options but increased your certainty of coverage. We'll look at the importance of insurance and at some of the options that are available to individuals who are no longer covered by employee insurance.

The Why
If you're young and healthy, you may have only used your insurance a couple times over the past five or more years. As long as your employer was footing the bill, you had no complaints about following the popular wisdom that you need health insurance. Now that you're looking at your number one monthly expense being a service you haven't used in years, you start to evaluate how much you really need health insurance. Here are some things to think about:

Avoid the penalty - Under the Affordable Care Act, every individual must carry some form of health care insurance regardless of your employment status.

Maintain health - Individuals are more likely to get health care, screenings, and take preventative measures when they have a healthcare policy that helps to cover the costs of diagnosis and treatment. By contrast, without coverage, they tend to be reluctant to get medical care until a condition worsens to a dangerous level.

Protect from high medical expenses - No one plans to need medical insurance. Accidents happen. Serious medical conditions can appear suddenly. If an individual has to pay all medical expenses out-of-pocket, the cost can soar overnight. If you don't have healthcare, you run the risk of financial ruin and burdensome bills for yourself or your family.

The What
The Department of Labor lays out four options for workers who have lost health care coverage due to a job loss. Job loss is considered a "life-altering" event which qualifies you to join a different health care plan outside of their normal open enrollment period. However, in most situations, you have only 30 days from your last day of employment to enroll in a new plan with a special enrollment status.

Another group plan - You may be eligible to join your spouse's or parent's employer provided plan. If this option is available, it is usually the most cost-effective plan.

COBRA - Federal law mandates that you can keep your employee health insurance for up to 18 months after your employment stops. You cannot be rejected. The shock and challenge may be the cost. Employers generally pay 3/4 of the cost of the premium, meaning that the employee may pay less than $300 for a family plan that costs over $1000/month. When employment ceases, the individual must assume the total cost for a plan that was previously subsidized by the employer. Pre-existing conditions or a desire to continue with a particular doctor or treatment plan not available through other options are reasons why individuals opt for costly COBRA coverage.

Government and Marketplace - Programs Workers may be eligible for Medicaid (low-income or special needs) or CHIP (Child Health Insurance Program). The Marketplace state health insurance is another viable option. With Marketplace coverage under the Affordable Care Plan, coverage can start the first day of the month after you lose your insurance. You may qualify for reduced monthly premiums or out-of-pocket expenses based on your income.

Private, Individual Health Insurance - Individuals cannot be excluded from enrollment in private health insurance based on pre-existing conditions if they are not eligible for any of the other plans. In the unlikely event that an individual is unable to secure healthcare through one of the other three options, you can pursue private pay insurance without fear of exclusion.