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Sunday, February 20, 2011

Health Insurance Rates Increase 65% When COBRA Subsidy Ends

When Americans lose their job, they are entitled to a certain amount of benefits for a period of time. For example, they will be eligible for unemployment benefits for several weeks, and COBRA medical insurance benefits for up to 18 months. While this is a good thing, when you have a limited budget it can be difficult to pay for your health insurance premiums through COBRA. To solve this problem, the federal government under Obama established a program that offered assistance to people who had just lost their jobs. This program provided 65% of each of the monthly premium paid for by the IRS for a few months.

Insurance companies love this program because the federal government gives them 65% of some of their most expensive plans. However everyone does not need COBRA benefits. While it is good and affordable at a 65% reduction in price, COBRA is the most expensive medical insurance plan available. The benefits are great, but when the subsidy ends, the bill can be a shock.

When clients get the first bill after the subsidy ends, their first instinct is to panic. Many of them run to the internet to find some alternative to the newly expensive plan. It is remarkable how much less the temporary medical insurance plans are for people who need major medical coverage. Sometimes up to a thousand dollars a month less in premium, temporary health plans provide the exact same coverage for hospitalization and surgery as the most expensive plans available.

Instead of the expensive copayments for doctor visits and prescription drugs, these temporary plans cover everything subject to a deductible and co insurance. Generally people find that the savings each month more than covers any doctor visit they might need for a flu.

Eventually everyone gets benefits through an employer or a spouse's employer and that is the best option for everyone. In an ideal world someone else will pay for your medical insurance. For those that find themselves in need of more affordable coverage because their COBRA subsidy just ended and raised their payment by 65%, temporary insurance can seem like it was sent from heaven to your budget.

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