Insuring my health care future
April 19, 2010 11:50 AM Subscribe
Should I drop my secondary health insurance?
I'm in the US. I have two health insurance policies. My primary insurance is from my employer and the benefits are excellent.
The second policy is an individual policy I bought several years ago when I was no long able to be covered on my parents' policy, but was not yet employed.
Since I bought my individual policy, I have been diagnosed with several relatively minor conditions (migraines, depression, anxiety) that would prevent me from obtaining a new individual policy if I drop my current individual policy.
The individual policy costs about $180 a month. It has a huge deductible - $5,000. I think of it as catastrophic coverage. Paying $180 a month is burden, but I can afford it if I need it.
I'm worried that I will lose my job and not be able to find another one. It's not likely I'll be laid off, but it's a slight possibility. I know I could use Cobra, but that only lasts 18 months. I have several extremely qualified and experienced friends who have been out of work for over a year now, so I know there would be no guarantee that I would even be able to find a job in 18 months.
Plus, if I keep my individual policy, I would have the freedom to quit my job and become a freelancer or open my own business. This would not be possible if I can't get insurance.
With the health care reform bill that just passed, I'm starting to feel like I don't need to hang onto to individual policy. I know it doesn't take full effect until 2014 though. If I lost my job for some reason, I would have 18 months of Cobra. If I was desperate for insurance, I could take a job at a big box store that offers health insurance until I was able to buy an individual policy again.
One final note, do you think the health care bill will stick? I've heard there are many challenges to the bill and I don't want to drop my coverage only to find out later that the bill has been overturned and can't buy my own policy.
I'm in the US. I have two health insurance policies. My primary insurance is from my employer and the benefits are excellent.
The second policy is an individual policy I bought several years ago when I was no long able to be covered on my parents' policy, but was not yet employed.
Since I bought my individual policy, I have been diagnosed with several relatively minor conditions (migraines, depression, anxiety) that would prevent me from obtaining a new individual policy if I drop my current individual policy.
The individual policy costs about $180 a month. It has a huge deductible - $5,000. I think of it as catastrophic coverage. Paying $180 a month is burden, but I can afford it if I need it.
I'm worried that I will lose my job and not be able to find another one. It's not likely I'll be laid off, but it's a slight possibility. I know I could use Cobra, but that only lasts 18 months. I have several extremely qualified and experienced friends who have been out of work for over a year now, so I know there would be no guarantee that I would even be able to find a job in 18 months.
Plus, if I keep my individual policy, I would have the freedom to quit my job and become a freelancer or open my own business. This would not be possible if I can't get insurance.
With the health care reform bill that just passed, I'm starting to feel like I don't need to hang onto to individual policy. I know it doesn't take full effect until 2014 though. If I lost my job for some reason, I would have 18 months of Cobra. If I was desperate for insurance, I could take a job at a big box store that offers health insurance until I was able to buy an individual policy again.
One final note, do you think the health care bill will stick? I've heard there are many challenges to the bill and I don't want to drop my coverage only to find out later that the bill has been overturned and can't buy my own policy.
I'm in a similar situation and personally, I'm hanging on to my individual health insurance policy. But I think my chance of a layoff is higher than yours.
posted by Jacqueline at 12:30 PM on April 19, 2010 [1 favorite]
posted by Jacqueline at 12:30 PM on April 19, 2010 [1 favorite]
No answers, but here's one more thing to think about. If your employer goes out of business, there is no option for Cobra. Cobra lets you stay on your previous employer's health plan for up to 18 months. If there's no employer anymore, there's no health plan for you to stay on. Obviously this is more of a risk if you work for a little start-up than a fortune-500 company, but it could also affect you in the future if you want to leave your giganto-corp. job to work for a small company.
If I were in your situation, I think I'd keep the supplementary insurance until 2014 shows up and the "no pre-existing condition limitations" rule goes into effect for adults. But I'm pretty risk-averse, so that's just me.
posted by vytae at 12:32 PM on April 19, 2010
If I were in your situation, I think I'd keep the supplementary insurance until 2014 shows up and the "no pre-existing condition limitations" rule goes into effect for adults. But I'm pretty risk-averse, so that's just me.
posted by vytae at 12:32 PM on April 19, 2010
Some points to consider:
My understanding of Cobra is that you get to have that insurance, but your employer no longer pays their part of it, which means that it will seem very expensive to you.
Similarly, the health care bill will allow you to get insurance with your pre-existing conditions, but it won't guarantee that the price will be $180.
And lately I haven't seen many big box stores just handing out jobs for the taking - you might not be able to get one.
AND - if you decide to drop your current insurance, you should put a good portion of that $180 into an emergency fund every month and just let it build up.
posted by CathyG at 12:50 PM on April 19, 2010
My understanding of Cobra is that you get to have that insurance, but your employer no longer pays their part of it, which means that it will seem very expensive to you.
Similarly, the health care bill will allow you to get insurance with your pre-existing conditions, but it won't guarantee that the price will be $180.
And lately I haven't seen many big box stores just handing out jobs for the taking - you might not be able to get one.
AND - if you decide to drop your current insurance, you should put a good portion of that $180 into an emergency fund every month and just let it build up.
posted by CathyG at 12:50 PM on April 19, 2010
I'm wondering if you can keep the coverage you're purchasing on your own (you've laid out some good reasons why you may want to keep it) and ask your employer to fold your health insurance premiums into your paycheck or a retirement account?
I would strenuously, strenuously recommend against this. You have a whole boatload of consumer protections with employer-based group health insurance that generally don't exist (yet) in the individual market, unless you happen to be living in Massachusetts.
Speaking very generally--because it's hard to know exactly what options you would have if your company went under or if you lost your job, unless we know what state you are living in--it probably wouldn't be a terrible idea for you to drop your individual coverage. In almost every state, individual coverage is guaranteed renewable--which means the carrier has to keep selling you your policy, even if you get sick--but very few states have existing regulations about how much the carrier could charge you. What that means is that if you lost your job, your COBRA ran out, it's entirely possible your individual premium would triple or quadruple when it came up for renewal. If you couldn't afford the increase, then you'd be uninsured, and out all of the thousands of dollars you paid while you were already insured at your job.
Plus: one of the current protections you have from your employer plan is the right to buy an individual plan without pre-existing exclusions once your COBRA runs out after 18 months. (Note that the rules surrounding this vary from state to state; you can probably find the rules in your state by googling "HIPAA eligible" + your state name.) For most states, there's no regulation on what the insurance company can charge you, but that's the exact same situation you'd be in if you lost your job and used your individual policy--so I'm not sure what you gain by keeping your current individual plan as secondary coverage.
Plus, part 2: one element of the massive health insurance reform bill that just passed was a lot of money for states to set up high-risk pools as a stopgap coverage method for people who find themselves unable to buy individual coverage between now (actually, more like July) and January 1, 2014, when the exchanges come online. That's another factor that would make me, personally, lean towards dropping my secondary individual policy--even if you lost your job, ran out of COBRA, and were for some reason unable to avail yourself of the HIPAA-eligible plans in your state, you'd still have some level of protection in terms of a federally-insured high-risk pool.
posted by iminurmefi at 1:03 PM on April 19, 2010
I would strenuously, strenuously recommend against this. You have a whole boatload of consumer protections with employer-based group health insurance that generally don't exist (yet) in the individual market, unless you happen to be living in Massachusetts.
Speaking very generally--because it's hard to know exactly what options you would have if your company went under or if you lost your job, unless we know what state you are living in--it probably wouldn't be a terrible idea for you to drop your individual coverage. In almost every state, individual coverage is guaranteed renewable--which means the carrier has to keep selling you your policy, even if you get sick--but very few states have existing regulations about how much the carrier could charge you. What that means is that if you lost your job, your COBRA ran out, it's entirely possible your individual premium would triple or quadruple when it came up for renewal. If you couldn't afford the increase, then you'd be uninsured, and out all of the thousands of dollars you paid while you were already insured at your job.
Plus: one of the current protections you have from your employer plan is the right to buy an individual plan without pre-existing exclusions once your COBRA runs out after 18 months. (Note that the rules surrounding this vary from state to state; you can probably find the rules in your state by googling "HIPAA eligible" + your state name.) For most states, there's no regulation on what the insurance company can charge you, but that's the exact same situation you'd be in if you lost your job and used your individual policy--so I'm not sure what you gain by keeping your current individual plan as secondary coverage.
Plus, part 2: one element of the massive health insurance reform bill that just passed was a lot of money for states to set up high-risk pools as a stopgap coverage method for people who find themselves unable to buy individual coverage between now (actually, more like July) and January 1, 2014, when the exchanges come online. That's another factor that would make me, personally, lean towards dropping my secondary individual policy--even if you lost your job, ran out of COBRA, and were for some reason unable to avail yourself of the HIPAA-eligible plans in your state, you'd still have some level of protection in terms of a federally-insured high-risk pool.
posted by iminurmefi at 1:03 PM on April 19, 2010
If you are involuntarily terminated, you may be eligible for the COBRA subsidy (if you are laid of by May 31 or if the subsidy is extended again), which means you pay only 35% of the premium you were paying before.
Also, HIPAA contains a guaranteed issue for people who exhaust COBRA and apply for an individual policy. Rules vary by state.
How does HIPAA apply when changing from group health coverage to an individual insurance policy?
You'd have access to an individual insurance policy and/or state high-risk pools if you:
* Had coverage for at least 18 months, most recently in a group health plan, without a significant break;
* Lost group coverage but not because of fraud or nonpayment of premiums;
* Are not eligible for COBRA coverage; or if COBRA coverage was offered under Federal or state law, elected and exhausted it; and
* Are not eligible for coverage under another group health plan, Medicare, or Medicaid; or have any other health insurance coverage.
The opportunity to buy an individual policy is the same whether a person quits a job, was fired, or was laid off.
posted by Pax at 1:56 PM on April 19, 2010
Also, HIPAA contains a guaranteed issue for people who exhaust COBRA and apply for an individual policy. Rules vary by state.
How does HIPAA apply when changing from group health coverage to an individual insurance policy?
You'd have access to an individual insurance policy and/or state high-risk pools if you:
* Had coverage for at least 18 months, most recently in a group health plan, without a significant break;
* Lost group coverage but not because of fraud or nonpayment of premiums;
* Are not eligible for COBRA coverage; or if COBRA coverage was offered under Federal or state law, elected and exhausted it; and
* Are not eligible for coverage under another group health plan, Medicare, or Medicaid; or have any other health insurance coverage.
The opportunity to buy an individual policy is the same whether a person quits a job, was fired, or was laid off.
posted by Pax at 1:56 PM on April 19, 2010
What I meant by "before" was 35% of what you would pay as a COBRA participant otherwise.
posted by Pax at 2:18 PM on April 19, 2010
posted by Pax at 2:18 PM on April 19, 2010
If I were in your position I'd drop the secondary policy, and put that money into a Roth IRA, or towards a short-term disability policy (assuming you don't have one already).
posted by ErikaB at 3:00 PM on April 19, 2010
posted by ErikaB at 3:00 PM on April 19, 2010
Can you change the individual account to something even more limited? Like a $10,000 deductible, or major medical only, to reduce the cost? And then if you *are* forced to lose the employer coverage, you could return to a better individual plan. Worth a shot...?
posted by gjc at 3:02 PM on April 19, 2010
posted by gjc at 3:02 PM on April 19, 2010
Well, I know my employer pays $600 a month for my health insurance (small business, so we pay more) and that $600 would be my responsibility under COBRA.
If I were in your shoes, I would call a broker and find out how much your monthly cost would be on your secondary policy if you were applying for it now, as a new customer. Once you know what you would have to pay out of pocket for it if you canceled it, you could make an informed decision about whether or not you want to take the chance on giving up your secondary policy.
Personally I wouldn't give up the policy, but the older I get the more I worry about healthcare. YMMV.
posted by dogmom at 7:57 PM on April 19, 2010
If I were in your shoes, I would call a broker and find out how much your monthly cost would be on your secondary policy if you were applying for it now, as a new customer. Once you know what you would have to pay out of pocket for it if you canceled it, you could make an informed decision about whether or not you want to take the chance on giving up your secondary policy.
Personally I wouldn't give up the policy, but the older I get the more I worry about healthcare. YMMV.
posted by dogmom at 7:57 PM on April 19, 2010
Secondary policies are usually a waste of money if you have coverage through an employer. Have you actually done a reconcilliation to see what kind of benefits you are getting for your money, considering coordination of benefit rules and your deductible? Plus many individual policies offer extremely limited or no benefits for mental health claims, so would you even be able to use any of the benefits, should you need them?
Here's an idea: You can easily pick up a hospitalization or dread disease plan (for cancer, stroke, heart attack, etc) through a carrier like Aflac if you are interested in that. It would not be major medical, and wouldn't replace the major medical individual policy you have, but would pay specific benefits for specific events. Many employers offer these on a pre-tax basis, but if yours doesn't, check associations you belong to to see if anything is offered. Costs are usually low ($30/month) and it probably will be guaranteed issue IF it's through your employer or an organization. (I used to work for a 5-person office, and the Aflac sales rep was very happy to come by and give a presentation/run the numbers for us.)
ErikaB's suggestion about putting the premiums in a Roth IRA is excellent. That would be my move.
posted by FergieBelle at 7:33 AM on April 20, 2010
Here's an idea: You can easily pick up a hospitalization or dread disease plan (for cancer, stroke, heart attack, etc) through a carrier like Aflac if you are interested in that. It would not be major medical, and wouldn't replace the major medical individual policy you have, but would pay specific benefits for specific events. Many employers offer these on a pre-tax basis, but if yours doesn't, check associations you belong to to see if anything is offered. Costs are usually low ($30/month) and it probably will be guaranteed issue IF it's through your employer or an organization. (I used to work for a 5-person office, and the Aflac sales rep was very happy to come by and give a presentation/run the numbers for us.)
ErikaB's suggestion about putting the premiums in a Roth IRA is excellent. That would be my move.
posted by FergieBelle at 7:33 AM on April 20, 2010
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posted by (Arsenio) Hall and (Warren) Oates at 11:58 AM on April 19, 2010