Tips to Reduce Health Insurance Costs When You Are Unemployed
by Guest Contributor
Health insurance policy is important to secure your family’s health and reduce unexpected medical bills. This not only helps you in times of medical emergencies but also helps protect your credit from being hurt by debt. However, the cost of health insurance is rising so much so that it is becoming increasingly difficult for people to afford health insurance. Affording health insurance is a challenge if you just got laid off and lost your generous insurance benefits package.
So if you have been laid off and you have not been able to buy a policy beforehand, what can you do? In order to reduce the cost of health insurance while you are not working, here are some tips that will help you save money:
1. Understand Health Policy Options
Health insurance policies are of different types and options. You will have to check the different options that are available in order to find out if there are any types of cheap health policies available. This might help you in lowering the costs of the health insurance policy that you are going to buy.
For example, some of your options are: (i) indemnity plan (fee-for-service), or (ii) managed care plan. In the indemnity plan (fee-for-service), you are free to go to any doctor you want for a fixed monthly premium, but the price of the insurance may be costly. In the managed care plan, your insurance cost is less but you have to choose doctors within the network only. HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) are common managed care plans.
Another option is to contribute to health savings account (HSA) and lower your taxable income. According to the IRS website, you can contribute to HSA even if you are unemployed. In this case, you will need to contact the administrator of HSA account. This is especially beneficial if you are young and you think you health care costs are going to remain low for the year.
Also, it is important to shop around and do your research carefully. You may be able to lower cost of your health insurance policy even more if you can find friends in the billing departments.
2. Check with State’s Coverage Policy
There are various types of health coverage policies offered by the states. So, you need to check with the state policies that are available and get one as these may sometimes be cheaper than the other policies offered by different insurance carriers.
This may be useful if you have a chronic illness and you have been denied health coverage from private health insurance companies or Medicaid. Several states have state high risk pools if you have been denied health insurance.
3. Check COBRA Options
COBRA is the Consolidated Omnibus Budget Reconciliation Act. It is a federal law which gives the permission to employees and also the dependents of the employees to continue with group health policy for up to 18 months in case of unemployment. So, this can be one of the best ways to get a cheap policy (because it is group policy) if you have been laid off.
Generally, you will get a letter from your company about COBRA if you are laid off. If not, you can contact the HR department within 30 or 60 days and find out your costs if you choose COBRA.
The only disadvantage of COBRA is that the employer is not required to subsidize the insurance costs. Since you don’t get matching contribution from the employer, COBRA may be more expensive than you expected.
4. Check with Medicaid and Medicare
Then there are the Medicaid options for low income families. You can qualify if you are either older than 65 years or disabled or if you are a pregnant woman. So, if you fall in this category and if you have been laid off, then you can try to find out your Medicaid options.
If you are over 65 years old or disabled or have long term kidney disease, you may qualify for Medicare as well. First you may be wondering if Medicaid and Medicare are the same. Medicaid is a state-governed program for low income families while Medicare is a Federal program for the older population.
You can apply for Medicaid at the state’s medicaid agency while you can apply for Medicare at the local social security office.
Some people may qualify for both Medicaid and Medicare. If you do, it will save you a lot of money.
With all these options listed above, you now may be wondering where you should start. It is a good idea to start exploring your COBRA options first and also research online using this government tool to find and compare insurance options. This tool was created to help consumers under the health insurance reform law, the Affordable Care Act. I have found that this tool provides an organized way to explore various options based on your family situation and where you live.
It is important to have health insurance whether you are employed or unemployed. For most of us who are employed full time, we do not have to worry about it so much because the employer provides several benefit packages. Although it is more difficult to find the right health insurance policy if you are unemployed, it is certainly possible to save money and continue to have health insurance with the help of ideas and tools mentioned in this post.