Bridging The Gap In Healthcare Costs

If you're between jobs, COBRA can provide affordablemedical coverage for you and your family. Here'swhat you former employer won't tell you.

a stop-gap.

While dental coverage is often linked to your company’s medical benefits, you can opt to separate the two under COBRA for savings of $40- $100 a month. Under that scenario, prepaid dental coverage, a plan that offers services–say, a filling or a crown at a flat fee might work for you if you’re comfortable enough with the state of your oral hygiene. Individual or family policies, however, are likely to make you pay three to six months in premiums before you can get your claim money back, says American Medical Security insurance agent Bob Parr.

The differential between single and family plans under COBRA can amount to hundreds of dollars. Family coverage, under many company policies, is more than twice as expensive as single coverage. That’s what Dane Arnold of Baton Rouge, Louisiana, found out last year when he went shopping for affordable coverage for himself, his then-pregnant wife and 18-month-old daughter. Single coverage under his old employer’s plan was $195.46, while coverage for the entire family pegged at $532 a month.

Arnold chose one member of his family, his wife, to be covered under a single COBRA rate, and chose cheaper alternative plans for the rest of his family. “It certainly added to my peace of mind,” says Arnold.

While a company has the right to designate two family members for a family rate, many allow a breadwinner to select two members for single rates, says Gary Hart, senior vice president for the Coldwater, Michigan- based consulting company COBRA Compliance Systems, a firm many human resource managers tap to keep abreast of the myriad provisions of the laws.

So, it may be less costly for a single parent to insure a child under COBRA, and then seek a high deductible plan to save on premiums. That’s what Linda Hearn, 48, did after being downsized late last year. Although her company paid her COBRA premiums for five months as part of her severance package, Hearn, a healthy single mother, found the $565 a month she was slated to pick up for her and her daughter’s coverage a bit much, considering the trickle of money she brought in from substitute teaching while hunting about for work. “It just wasn’t feasible given my situation,” says Hearn. Her solution was to sign her daughter up with a Blue Cross/Blue Shield HMO for full coverage and opt for catastrophic insurance for herself. Her new bill: $110 monthly.

Finally, be aware of changes brought by the Healthcare Availability and Portability Act of 1996, which guarantees that at the end of COBRA coverage, an insurer must offer a coverage package, even if you have a preexisting condition. The effect of the new law won’t necessarily alter your company coverage or COBRA benefits until the latter half of 1997, “The expectation is that in most cases, COBRA will look the same,” says Barbara Yondorf, an insurance regulator for the state of Colorado. However, what happens after your COBRA coverage time has run out will be affected, she points out.

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