January 2012 — Page 3

Introduction

If becoming unemployed isn’t bad enough, you also just lost your employer sponsored health insurance. While nothing I can suggest will make this bad situation into happy times, ideas for coping with the resulting health insurance problem can help. The choice of health insurance needs to be made quickly to retain your important health insurance protection. Are you going to bite the high cost of COBRA or strike out on your own health insurance plan? Not enough money for COBRA? What are there other choices?

To COBRA or Not to COBRA

If you were employed by a company that was large enough to be COBRA qualified, then you can keep your current health insurance but it will be a painfully high price. Your recent employer is required by this Federal Law to send you notice of eligibility. You have 63 days to either choose COBRA or not and then it’s off the table. You can then keep a COBRA health insurance plan for up to 18 months.

The hard part of COBRA is that the cost can be out of reach particularly since your paycheck just got eliminated. If you have substantial ongoing medical costs or pre-existing conditions, this will provide an essential bridge to your future group coverage and is the only safe route to go. A COBRA health insurance plan is “HIPAA” qualified and will not exclude your pre-existing health conditions. Also, when you are hired and can join a new employer based group plan, the HIPAA rule will apply and your new group plan will count your time on a COBRA plan as “Creditable Coverage.”

Note: COBRA coverage is dependent on the prior employer’s group plan. If the company is out-of-business or ends their group health benefit, you will lose your COBRA benefit.

State Continuation

Texas and some other states have a mandated health benefit continuation. This can help if your employer is too small for COBRA (less than 20 employees). Generally it is a much shorter benefit period (Texas is 6 month) but it is worth asking about if no COBRA health insurance benefit is available. Like the COBRA option, paying the whole price is the downside.

Short Term “Gap” Health Insurance

Inexpensive “Gap” plans are designed for short time periods and need protection for an unexpected acute illness or injury. These plans can work great if you are “between jobs” and are just waiting for eligibility with your new employer’s group health plan. Generally, short term policies are offered for up to a six month contract period.

They are not a safe choice for anyone with significant pre-existing medical conditions since prior medical conditions will be excluded on Short Term plans. Also, Short Term plans are not considered “Credible Coverage” under the HIPAA rule and your future employer group plan can apply pre-existing condition exclusion if your gap between group plans is 63 days or more. Third, while Short Term plans have simplified health screening, you still have to have good health to qualify. A fourth concern is the potential risk of a new illness or injury occurring that can require treatment beyond the very limited contract time period.

Individual / Family Health Insurance

If you and your dependents can qualify on the initial health screening and can afford the price (High but often much less than COBRA), your own Major Medical Insurance Policy is a good option. The High Deductible plans that are also Health Saving Account compliant can deliver good protection from the risk of a major illness or injury on a tough budget. Unlike Short Term “Gap” plans; a Major Medical plan (including the High Deductible versions) has real staying power and substantial benefits.

Many employers, particularly smaller companies, don’t offer a group medical insurance benefit. Having your own health insurance can open your job hunt to these positions without employer benefits. Having your own medical benefits also can help open the door to being self-employed.

Summary

First, good luck on your job hunt. While you are looking for new work, don’t risk being without the financial protection of health insurance. COBRA can be painfully expensive but may be necessary if you have ongoing healthcare needs. An inexpensive Short-Term “Gap” insurance plan can be a good fit for some situations. Getting you own Major Medical Insurance policy is a third option that can also broaden your employment prospects.

David W. Crump, Ross Gray Insurance Agency

Link to Health Insurance information & quotes: http://www.quoteaustininsurance.com/pages/home/health-insurance.php.

I specialize in Business, Health and Personal Insurance sales and service. A graduate of Texas Tech University (BBA Marketing), I began my career in retailing of Toy, Hobbies and Games. I have been a business owner but changed careers to insurance after selling my interest in a Dallas area Game Store Chain thirteen years ago. Hobbies include Gardening, Music (Bass Vocal) and Stock Investing.

See our website at http://www.quoteaustininsurance.com/.

Ross Gray Insurance Agency has a 30+ year history serving Central Texas on all facets of insurance. We are located in South Austin at 2404 S. IH-35. We are here to help!

Common Sense Solutions to America’s Health Insurance “Crisis”

Insurance works best when it’s rarely used. That’s why life, automobile and homeowner’s insurance are relatively affordable.

Death occurs only once, and we make every effort to avoid it. Auto insurance isn’t designed to reimburse us for oil changes, gasoline, car washes or tires. We don’t use our homeowner’s insurance to pay for light bulbs, lawn maintenance, cleaning people or paint.

Shouldn’t health insurance work the same way?

Ordinary health maintenance should not be treated as an event that triggers insurance coverage. Health maintenance should be encouraged, but not financed by an insurance company. Insurance should be limited to unpredictable and expensive medical events that seldom occur… the way all other types of insurance perform.

Deductibles that are too low, doctor visit co-pays and first dollar coverage for prescription drugs, encourage people to overuse health care services. They also drive insurance premiums to a level completely beyond the value of any benefits received.

Insurance companies are in business to make money, remember?

Your premiums are calculated to exceed the cost of any benefits that are likely to be paid out. On average, you would need to run to the doctor every month in order to justify and break even on the additional cost of a having an office visit co-pay benefit. Realistically, have you ever been that sick?

Prescription co-pay coverage can easily account for over 25% of the cost of insurance… and over 95% of the population is better off just paying cash at the pharmacy!

The term “medical insurance” has become a misnomer. The general definition of an “insurable event”… whether a traffic accident, tornado, heart attack or spinal injury… is something that is (1) unlikely to happen; (2) will occur without warning; (3) is not something that the insured person wants to happen; and (4) would create a severe financial hardship if paid for out-of-pocket. This definition applies to catastrophic health events… serious illnesses and injuries. It does not apply to routine health maintenance, does it?

Homeowner’s insurance covers fires, roofs destroyed by falling trees, and other costly events. Automobile insurance covers major damage and theft. But what passes as health insurance has expanded to include just about everything, including the routine, the predictable, and the easily affordable.

And, as you know, there’s no such thing as a free lunch!

Most health insurance plans use co-pays as the method of cost sharing. Co-pays became a standard part of drug-benefit and doctor-visit coverage during the managed care revolution of the 1990s. However, they are not consistent with any rational health plan design. When something is free or inexpensive, there is an overwhelming tendency to consume as much of it as possible. If there is very little cost (at the point-of-service) to see your doctor, why not schedule a visit for the sniffles, or pop the latest, greatest pill?

Co-pays are helping fuel the health insurance crisis in America.

The overuse and abuse of coverage is what drives annual double-digit cost increases. Insurance companies are forced to either pass on the costs in the form of rate increases or to reduce coverage… often in areas that can bring about financial devastation at claim time!

So, ironically, a major reason that health insurance has become so expensive is because co-pay medical care appears so cheap!

The Solution…

Health insurance is needed to protect against large medical expenses. The majority of our insurance agents (and their most enlightened clients) select high-deductible health plans for themselves and their families… to protect against true medical emergencies… and they “self-insure” for doctor visits and prescription drugs.

Doctors are often quite willing to offer deep discounts to those who are willing to pay in full by cash at the time of the visit because they rid themselves of the time spent coding and filing insurance claims. And most insurance companies offer prescription drug discount programs, free of charge.

In fact, outpatient prescription drug coverage should be a non-issue with the advent of low-cost retail generic drugs. Wal-Mart pioneered the concept of charging only $4 for generic drugs, and now more in-store pharmacies are adopting similar pricing. The good news is that there’s a generic equivalent, if not an exact chemical copy, of virtually every brand name drug in the world. So why waste hard-earned dollars on a $10 Rx co-pay plan?

This returns health insurance to its original purpose and eliminates administrative expenses for small claims. And with the variety of low-cost alternatives to high-priced health plans that are readily available… even for the least healthy among us… as health insurance premiums drop through the floor, those savings will almost always offset any potential additional out-of-pocket expenses.

Mark Goldstein is president of The Producers Alliance, a national independent insurance marketing organization. His specialty is recruiting, training, and developing top producing independent health and life agents.

Mark was the number one health insurance producer for The National Business Association from 1995 through 1998 and the top agency manager for American Republic Insurance from 1999 through 2001, before launching The Producers Alliance… http://www.TheProducersAlliance.net… in September of 2001.

Mark Goldstein can be reached at (877)442-0698 or by email at Mark@TheProducersAlliance.net.

Archives for January 2012

Laid Off, Need Health Insurance?

Common Sense Solutions to America’s Health Insurance “Crisis”