November 21, 2007
Part one of many
Truthfully, evaluating health-care options is a 50 part series because every state has different statues, programs and insurability requirements. I live in a state that takes a very hands-off approach to how insurers deal with their policyholders. There is little or no safety net in the way of last chance health insurance for the uninsurable; I know successful businessmen who’s wives work part-time as grocery store cashiers just for the health benefits. When people have to evaluate their health care options, it’s no joke.
Some health insurance options when taking the self-employment plunge:
- COBRA
- Individual health insurance/ small group health
- Temporary coverage
- Part time coverage for the benefits
- Move to a state that has offers major medical or catastrophic coverage for uninsurable citizens.
Notice I didn’t list self-insure as a realistic option. Unless your net worth is above $20 million dollars, living without health insurance is like playing bankruptcy roulette.
To keep this post under 100,000 words, I’ll cover the COBRA option today.
COBRA (Consolidated Omnibus Budget Reduction Act of 1985 (say that 5 times fast)) gives employees of companies (with more than (usually) 20 employees) the option to continue their group coverage if the employee quits the company for any reason other than gross misconduct. The employee is responsible for 100% of the group premium plus a processing charge.
Things to keep in mind about COBRA:
- Benefits end after 18 or 36 months (depending on the event that caused you to leave the job)
- Your employer is not required to bill you; forget a payment lose the coverage.
- You become ineligible if your employer suspends group coverage.
- If you terminate the coverage, you’re not eligible to get back in.
- Your benefits are expensive, budget $300-500 per month for single employees, $700-$1200 per month for family coverage.
If your plan is to ‘test the waters’ with self-employment COBRA is a good option for 18 months. Keep in mind it’s a good idea to have a plan ‘B’ in motion in case COBRA falls through for one of the reasons listed above or self-employment suits you and you kiss Corporate America goodbye forever . If you’re planning on applying for individual health insurance coverage DO SO WELL IN ADVANCE OF LOSING YOUR COBRA COVERAGE! DO NOT wait until your COBRA benefits are about to expire then find out you, your spouse or one of your children are uninsurable or a pre-existing condition has a required waiting period. At this point you’ve waited too long.
CLICK HEREto further research COBRA rules and guidelines.
