First, recognize that there are options, so that stress doesn't lead you to make a decision you'll regret. Making the right choice has everything to do with you, your health, your finances, and your family situation. Here are three possibilities to get you through what, hopefully, will be a temporary between-jobs situation:
Read on for three health-insurance options.
# 1: Ride the COBRA. Assuming your company has more than 20 employees, it is obligated to tell you about COBRA benefits. (That's an acronym for the federal Consolidated Omnibus Budget Reconciliation Act, but just about everybody just calls it COBRA.) What it means is that you are entitled to keep getting the health insurance you had when you were working, no approval process necessary, for up to 18 months.
However, you’ll be paying all of the premiums that had been subsidized by your employer. And that can be expensive. Some estimates show that a policy that covers a single person can cost nearly $400 a month. If it’s you and your family, costs can go as high as nearly $2,000 a month depending on what options you choose for copayments, prescription benefits, and hospitalization coverage.
Who it's good for: People who would otherwise be paying higher premiums. For insight, we spoke with Jerry Redington, a veteran health-insurance broker in the Philadelphia area. He cited an example of a 22-year-old woman, in good health, who would have had to pay over $500 a month for COBRA. Instead, he found her policies she could get with premiums ranging from $185 to $217 per month. The key was that she was young and healthy, keeping her premiums low. "Older folks with preexisting conditions would be better off staying with COBRA," he says.
# 2: Sign up with your spouse. Another option for people who have just lost their jobs is to apply to get on the policy of a spouse or partner. Redington says insurance companies routinely allow for immediate enrollment in the case of what are called "life event changes."
Who it's good for: Someone married to a covered spouse. Some companies also extend the option to domestic partners. Be aware, though: If your significant other is the only person covered on that plan, and you are added, it becomes a (more costly) family plan. “Premiums can double,” says Redington. So compare the cost bump to the COBRA premiums.
# 3: Find a short-term policy. These polices are designed to fill a gap between longer-term coverage options. "They can cover you, for instance, if you get a new job but the health care on that job doesn’t kick in for three months," Redington says.
Who it's good for: Someone who doesn't have chronic health problems. Most of these short-term policies don't cover preexisting conditions. So while you're protected against an unexpected catastrophe, you're on your own for most everything else.
None of those options seems like a good fit? Check with your state government to see if you are eligible for insurance under a high-risk pool plan. Those plans are often lower cost. Also see our stories on low-cost health services and healthcare costs during the recession.