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An individual health insurance policy may be a better alternative
than electing COBRA coverage, according to Colorado health insurance
expert Michael Horvat, founder of Healthquotes.com. Under COBRA, the
former employee is responsible for up to 102% of the premium, whereas
they likely paid only a fraction of the premium as an active employee.
Care should be taken to choose the best individual policy given the
former employee's unique situation.
Colorado Springs, CO (PRWEB) April 26, 2007 -- Employees in Colorado
who lose their jobs may want to consider an individual health insurance
policy as an alternative to continuing their former employer's group
policy through COBRA. "While the decision to participate in COBRA
depends on multiple factors -- such as pre-existing conditions and the
length of time someone will be out of work -- the cost of COBRA
coverage is often surprising," according to Healthquotes.com founder
Michael Horvat, who has over 28 years of experience as a Colorado
health insurance broker. "Individual policies can be prohibitively
expensive in some states; however, Colorado has very reasonable rates,
making individual policies an attractive alternative to COBRA."
Introduction to Cobra
COBRA is often confused for a health insurance plan; however, it
actually is an acronym for the “Consolidated Omnibus Budget
Reconciliation Act (COBRA).” Congress passed this law in 1986 to
provide certain former employees, retirees, spouses, former spouses,
and dependent children the right to temporary continuation of health
coverage at group rates. The law generally covers health plans
maintained by 1) private-sector employers with 20 or more employees, 2)
employee organizations, or 3) state or local governments. COBRA
continuation coverage generally lasts for a maximum of 18 months. More
information about COBRA is available at
www.healthquotes.com/dol-faqs.html.
The cost to continue group health coverage for COBRA participants is
often significantly more expensive than the cost for active employees,
who typically pay only a fraction of the insurance premium. COBRA
participants, on the other hand, may be required to pay up to 102% of
the premium costs.
Individual Health Policies
Individual health policies are an alternative to COBRA and fall under
two categories: short term and permanent. In Colorado, inexpensive
short term policies are available, particularly for someone who has no
pre-existing conditions. These policies typically provide 90 days of
coverage but can be extended up to 185, or in some cases, 365 days.
Short term policies usually have more exclusions than COBRA coverage or
permanent policies. This is why it is important to work with an
experienced broker to understand how the details of each policy will
impact the applicant’s unique situation.
If a separated employee anticipates being out of work for a longer
period of time or wants to investigate self employment, then a
permanent individual policy may be a better option. These plans usually
offer more comprehensive coverage than short term plans.
Final Considerations
COBRA coverage may be a reasonable option if a separated employee or
family member has a pre-existing medical condition; however, it is
important to speak with an experienced health insurance broker to see
how much pre-existing conditions will impact the cost of an individual
health policy. A good broker may still be able to obtain significant
savings for separated employees with pre-existing conditions.
About Healthquotes.com
Healthquotes.com is a Colorado based health insurance broker. We
provide free quotes for Individual Health Insurance which includes
Major Medical, Preferred Provider Organizations (PPO), Health
Maintenance Organizations (HMO), Group Health Insurance, Self Employed
Health Insurance, Medicare Supplements, Long Term Care Insurance,
Medical Savings Accounts, Disability Insurance, Life Insurance, and the
following specialized plans: Student Health Insurance, International
Health Insurance, Dental Insurance, and Short Term Health Insurance.
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