Short-term solution for healthcare gaps

For workers facing a layoff, the drive to maintain family health coverage can be as all-consuming as the search for a new job.

Most severance packages come with the option of staying enrolled in an ex-employer's health-insurance plan by purchasing insurance through the 1985 Consolidated Omnibus Budget Reconciliation Act, or COBRA.

But that option has its limits. COBRA allows terminated workers at firms with 50 or more employees to buy at group rates, but not indefinitely.

While it is cheaper than most private insurance, COBRA coverage usually costs more than coverage under a company's employee plan, since the employer no longer picks up a percentage of the plan's premium.

Another option: short-term private-insurance policies designed to help bridge gaps in coverage. "Temporary health insurance isn't a new concept," says Richard Coorsch, vice president of communications with the Health Insurance Association of America.

But neither is it widely publicized. "Not all carriers sell it - a few carriers specialize in it," Mr. Coorsch adds.

With the current economic slowdown, that may change, experts say. "With large employers like Barnes & Noble, Sears, Verizon, and GM experiencing mass layoffs - not to mention thousands of smaller companies - there is an even greater demand for temporary insurance," says Kathy Clark, market development director in the specialty products division at Fortis Health Insurance in Milwaukee, Wis.

"[There's] a lack of consumer awareness about temporary insurance; most don't even know it exists," she adds.

Temporary health insurance works well for people in various situations, including new employees in a health-insurance "waiting period," recent college graduates no longer covered by a family plan, temporary employees, retirees facing a short wait for Medicare coverage, and recently divorced individuals no longer covered by a spouse's policy.

Start with a few rate-comparison calls to reputable carriers, experts recommend.

Some factors to consider:

* Depending on the coverage, temporary health insurance - true to its name - covers a limited period, generally from 30 days to six months.

* Most temporary policies do not cover pre-existing conditions. If you have a question regarding an existing medical problem, you will want to check with your agent to see how their company defines "pre-existing condition." If you don't qualify for temporary insurance, consider extending your current insurance to fill the gap in coverage.

* Most temporary policies do not include coverage for preventive care, physicals, immunizations, dental, or eye care.

* To reduce your premiums, choose a high-deductible plan. With a 50/50 option, the insurance company covers 50 percent of covered expenses after the deductible; the customer pays the other 50 percent up to a cap. Customers are protected from unexpectedly high medical bills by the cap on the amount of out-of-pocket expenses they are required to pay.

* You can usually save money with a one-time premium payment.

* Avoid trying to cut costs by choosing coverage with an unknown or low-rated insurance company. Check with your state's insurance commission or Office of Consumer Affairs to learn how the company is rated.

* Read the coverage information carefully, taking note of the "exclusions" section. These are the areas that are the sole responsibility of the insured.

* Contact an independent insurance agent to give you quotes on policies from different companies offering temporary insurance through licensed, full-time agents.

(c) Copyright 2001. The Christian Science Monitor