The Kansas CW | Employer-based health insurance is no longer an option for millions

Employer-based health insurance is no longer an option for millions

By Matt Loewe, InsWeb.com

Recession, depression, cutbacks and layoffs are words all too commonly heard these days in news reports and conversations. Since the beginning of the financial crisis, millions of Americans have lost their jobs and many economists are predicting that more job cuts are on the horizon.

With the loss of their jobs, Americans are not only losing their source of income, but for the 63 percent of Americans under the age of 65 who have health insurance through their employer, they are losing that as well. In February, the unemployment rate hit 8.1 percent according to the Bureau of Labor Statistics (BLS). This translates into roughly 12.5 million people who have lost their jobs. The Urban Institute, a nonpartisan economic and social policy research organization, estimates that for each 1% rise in unemployment, 2.4 million Americans lose employer-based health care.

For many of the newly unemployed, their first step to maintaining health insurance is to sign up for coverage via the Consolidated Omnibus Budget Reconciliation Act (COBRA). That's exactly what Sally Hughes of California did.

Sally Hughes signed up for COBRA after she lost her job in July 2008 and is thankful she was able to maintain health insurance.

"Last month I fell and broke my two front teeth. With the dental insurance through COBRA I saved thousands of dollars on the treatment," said Hughes. "Plus, with COBRA I am still on track with my routine doctor visits and preventative care."

COBRA gives recently unemployed workers and their families the right to choose to continue health benefits provided by their group health plan for limited periods of time under certain circumstances. These include a voluntary or involuntary job loss, reduction in hours worked, transition between jobs, death, divorce, and other life events. To maintain coverage via COBRA, qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan (BLS).

But there are other health insurance options that could be less expensive than COBRA. For example, if a married person loses their job, it might be possible to join his or her spouse's employer-based health insurance policy as a dependent.

There are also individual health insurance plans that are available through most major insurers. These plans include HMOs, PPOs and HSAs. The downside is that people with a preexisting condition will undoubtedly pay more for an individual health insurance policy than what they were paying for their employer-provided health insurance.

Another option is to create a health savings account (HSA) to pay for qualified medical expenses. HSA plans offer unique tax breaks in that the interest earned on a HSA account is tax deferred and withdrawals from the account, assuming the withdrawals are for qualified medical reasons, are tax free.

For the recently unemployed, it is imperative to maintain health insurance coverage if at all possible. Sally Hughes is the first to admit that her story would be a lot different if she did not have COBRA coverage. And with cutbacks and layoffs likely to continue, more and more Americans will be forced to look into non-employer-based health insurance options.

This article is provided by InsWeb Corp.Protect yourself from the inconvenience of high health care expenses.  Visit InsWeb.com today to compare multiple health insurance quotes from the nation's top providers and local agents.