The COVID-19 pandemic left many people without a job quite unexpectedly and as a result, they may have been faced with the Herculean task of trying to find health insurance coverage for their family at a time when uncertainty reigns, money is tight and time is of the essence.
Those are the ingredients for the perfect storm, but you can weather this bump in the road if you take a step back and carefully consider your choices before moving forward.
The first option facing many people may be COBRA. If your company has more than 20 employees, COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, will likely be offered. COBRA isn’t insurance itself, but a program that allows eligible employees and their dependents to extend their current benefits of health insurance coverage temporarily.
The pros of COBRA is that you are familiar with your benefits and can continue with your coverage, said Jan Sherman, insurance broker at The Benefits Edge, LLC in Farmington Hills. The downside is that you now have to pay all the costs for your coverage. When you were working, your employer likely paid a significant amount toward your health insurance as a benefit. As a former employee, if you choose COBRA, you will now bear that burden on your own.
If you have extensive medical needs or expensive prescriptions, COBRA may be a good choice, said Sherman. However, he added that usually COBRA is not the right fit for many families. That’s because it can be very expensive and provide some coverage that you don’t need.
Another option is a short-term medical policy, said Sherman. These can provide gap coverage for a short period of time until you find new employment. These policies may cost one-third less than plans available on the health insurance marketplace, but they often exclude pre-existing conditions, he said.
The marketplace provides different levels of coverage. Since it is based on income, some people are pleasantly surprised by the level of coverage they qualify for. An important point to consider with Marketplace coverage is that you should evaluate all options, said Sherman. Some people automatically gravitate toward gold coverage because they are comfortable with a specific level of benefits. However, he said when you look at the coverage itself, your needs might be met by a silver or bronze plan, especially if you expect to need it only until you find new employment.
This is why it may be helpful to consider the services of an insurance broker. These are professional advisors who look out for your best interests and can assist you with assessing your risk, determining proper coverage protection levels and recommending products that are best suited to manage your family’s needs. They are familiar with all types of health insurance plans and can walk you through the benefits and drawbacks of each so you can make an informed decision.
Never do finances come into play more than when you are choosing health insurance coverage after a job loss. Most of the time, decisions do come down to a matter of dollars and cents, but you always have to be comfortable with your level of coverage, said Sherman.
Dental insurance, for example, is nice coverage to have, but may not be the best choice during a temporary job loss. The reality is most dental procedures won’t cause extreme financial hardship if you have to pay out of pocket, he said. The goal of insurance is to insure risks you can’t absorb.
On the other hand, some people like the reassurance that comes with having that kind of coverage and will want it even if it stretches their budget a bit. It all comes down to your personal comfort level.
The key, said Sherman, is to take a realistic look at the coverage you need, not just what you are used to. Examine all your options and choose the plan that meets your needs and budget while providing you with a level of comfort that can help you sleep at night.