This month President Obama signed into law the American Recovery and Reinvestment Act of 2009, which included a provision to provided a COBRA premium reduction to qualified individuals who lost their job on or after September 1, 2008 through December 31, 2009. Under Obama's Stimulus Package, you may be eligible for a 65% reduction in COBRA premiums as soon as March 1st. Exciting news, right? Well, lets not get too excited too fast...

Unfortunately, here in Indiana, where some counties are suffering with unemployment rates above 20%, unemployment benefits max out at $390 a week. The typical family COBRA payments are over $1,000 a month! When I lost my job a few years ago, COBRA premiums would have been $1,200 per month. If the law had been enacted in 2007 my COBRA payments would have been reduced to $420 per month.

Although $420 is much better that $1,200, I was only receiving $390 per week in unemployment and I could not afford to spend 26% of my monthly income on health insurance. Since my COBRA rate was unaffordable, I did what most unemployed folks are doing today. I picked up a Temporary Health Plan from Assurant Health for less than $150 a month and my wife and I stayed on this plan until I was able to purchase a High Deductible HSA plan at $233 a month from Anthem.

So even though it appears that the President is helping Americans who need insurance, the sad facts remains that most unemployed workers will still not be able to afford to continue COBRA coverage for their families. Many people are turning to temporary health insurance since you can usually pick up a plan for less than $70 a month per person. But before rushing out to sign up for temporary health insurance, you need to be aware of a few things:

1. Temporary health insurance is designed to be TEMPORARY. Most plans will allow you to sign up for up to 6 months, but you must re-apply at the end of your six month term. If you forget to re-apply you are not covered.

2. Since the plans are temporary, if you develop a chronic illness during your six month term, the insurance company is not obligated to cover you for another term. In fact, pre-existing conditions are not covered by temporary health plans.

3. I found out the hard way that Temporary Insurance does not qualify as credible coverage in Indiana. If you have a pre-existing condition and you seek traditional insurance coverage, you will find that your pre-existing condition will not have coverage unless you have had a gap of less than 63 days in coverage since you lost your permanent plan. You will be required to produce proof of coverage to have pre-existing conditions covered on any permanent plan. I have asthma. I elected to go with temporary insurance after turning down COBRA coverage. I only had a 15 day gap in coverage so I thought that I would be fine, however; when my Temporary Insurance expired and I enrolled in traditional insurance, I found that I had a 6 month gap since my last "permanent" coverage and my asthma related medical expenses would not be covered for 12 months!

Temporary Health Insurance does provide excellent catastrophic coverage, but you just need to be aware of the limitations.


So if you find yourself without health insurance what other options are available? Here are a few tips:

Value or Economy Plans: Most carriers offer at least 3 pricing levels to help customers find a plan to fit their budget. These "value" or lower priced plans offer the cheapest alternative. You will get a price that you can afford but you will have to accept a higher deductible, reduced or no doctor visits, and limited prescription benefits. Under normal budget circumstances you may not desire a plan that has limitations but if you are unemployed it is a better choice than temporary coverage, and at least you will have coverage if something catastrophic happens. Yes, you may have to pay more to see a doctor, but paying to see a doctor will not put you in bankruptcy like being stuck with a $200,000 hospital bill!

HDHP / HSA: High Deductible Health plans are actually a great alternative for those looking for affordable health coverage and for those looking to save money by taking more responsibility for the cost of their health care. A plan that is HSA eligible allows you to establish a Health Savings Account and receive tax savings when you pay for medical expenses using your HSA checks or debit card. I was able to save over $200 a month in premium by purchasing a plan with a $10,000 deductible. I was able to put aside some of that savings in the HSA account to help with deductibles and co-pays. Over 20% of the individual plans sold today are HSA plans and the number is growing due to the these tough economic times.

Finally, if you are in need of affordable health insurance, you do have better options than Obama's unrealistic COBRA plan. You just have to decide which benefits you are willing to sacrifice in order to get a plan that will fit your budget. Individual plans do not require a term agreement, so you can always switch plans if your budget changes or if you find a job with great benefits next month.

Tags: health insurance, temporary, Obama

It is always good to read the fine print of any plan before subscribing. Many plans offer low monthly rates, but to lower prices something must be sacrificed. One common practice is exclude wellness visits as a standard benefit. I received a call from a client today who just received a bill from their annual visit to their gynecologist for. They chose a "value" plan that covers wellness visits, however, there was a catch: Their particular plan covered wellness visits after the deductible had been met. Although they enjoyed spending $40 less a month for their plan the past 6 months, the little asterisk on their benefit summary is upsetting today.

Some plans still do have Wellness visits included: Anthem Lumenos plans currently cover Wellness Visits, but lab tests and other services outside the "office visit" code are subject to deductible and coinsurance. Assurant Health Unicare also offer a decent wellness visit on several of their plans. Always read through your policy or benefit summary when you sign up for a new plan. For some, saving $40 to $60 a month is more important than getting wellness visits paid for, but for others, wellness visits are critical. Be aware that wellness visits are not automatically covered on most plans today, and if they are included watch out for limitations.

Tags: doctor visits, Anthem, Lumenos