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If you have just lost your job or are thinking about changing jobs or retiring, keep reading—you need to know your legal rights under COBRA and HIPAA—the two most important federal laws that protect your rights to health insurance coverage. (If you think you know them, think again, the rules changed in 2005.)

If you own your own business you'll want to carefully read everything in this chapter, since hidden in the rules of COBRA and HIPAA are the ways to secure affordable permanent health insurance for your chronically ill employees.

You should choose COBRA only as a very last resort. It is expensive (typically $1,200 per month or more for a family, $400 per month for an individual), temporary, and if you should develop a health condition while on COBRA, could prevent you from getting permanent affordable health insurance. Most people are much better off buying an individual/family policy.

COBRA should almost always be your last choice, because it is both expensive and temporary; however, for people with expensive preexisting medical conditions that prevent them from qualifying for an affordable individual/family policy, it is a critically important backstop. You should always be familiar with your COBRA rights and obligations.
In some states, if you have a family member with a serious preexisting condition, you can save tens or hundreds of thousands of dollars by becoming HIPAA-eligible, but to do this, you may have to accept and exhaust your COBRA benefits (as explained in Chapter 7). Some states require you to be HIPAA-eligible to qualify for “state-guaranteed” permanent coverage (discussed later in the chapter).

The COBRA Loophole—How to Get Three ½ Months of Free Health Insurance Protection from Your Employer, Saving You $1,400 When You Change Jobs
If you've been following this closely, which you should be if you or your spouse just became unemployed, you may already see the “COBRA loophole.” This loophole can save you the cost of 105 days (three and one-half months) of health insurance coverage if you are healthy, worth roughly $1,400, which you can put toward the purchase of your own individual or family health insurance policy at $400 a month.

You could also use this COBRA loophole if you are planning to take another job that includes health insurance but for which there is a 30- to 180-day waiting period before new employees are eligible to join the group plan.

 

  
  ADDITIONAL RESOURCES FOR THE NEW HEALTH INSURANCE SOLUTION
   



New Health Insurance Solutions for individuals, families, self-employeds, and businesses.

  



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