Health insurance: COBRA or short-term plan?

[red92s]

I very recently became unemployed. As such, I have to make some decisions about my health care for the immediate future. I see pretty much three viable options:

A) Meh . . . who needs health insurance anyways?
B) Maintain current coverage through COBRA
C) Get a short-term type plan until re-employed

Stats: 26, male, athletic , no risky health behaviors, no known health issues or prescriptions. I've been unemployed about 2 weeks. I have several potential options already, but given my education and flexibility with relocation I should be able to find a position within 3-4 monts (hopefully). I have about $2200 in an HSA account.

To continue with my current coverages under COBRA would be about $300/mo including dental and vision. However I qualify for the COBRA reduction part of the stimulus bill which knocks it down to around $100. I've priced out short-term plans in the $60-90 range.

Obviously the short-term plan is the best play financially. But, there seem to be lots of limitations and stipulations around pre-existing conditions and stuff like that. I'm really not sure it's worth saving the $20 a month for the reduced coverage and higher potential to get tripped up on a pre-existing condition claim.

[disneysteve]

Normally, I'd say to avoid COBRA unless you live in a lousy insurance state (like here in lovely NJ). In your case, though, thanks to the COBRA stimulus deal, I'd take the better coverage and stick with what you've got if the difference is so small.

[red92s]

Normally, I'd say to avoid COBRA unless you live in a lousy insurance state (like here in lovely NJ). In your case, though, thanks to the COBRA stimulus deal, I'd take the better coverage and stick with what you've got if the difference is so small.

I was pretty shocked at the non-subsidized COBRA rates. That was my first real look at what my employer was shelling out every month for health care costs. I think I was paying about $45, so their portion of the bill was substantial.

After some reading it looks like I can use HSA funds to pay health care premiums, but only for COBRA where I am unemployed through no fault of my own. Since I've never used the HSA for anything else, might as well get some use out of all those tax-free dollars by covering my health care temporarily.

[red92s]

The COBRA stimulus deal is hard to pass up. But it is not permanent.

Problem: You take COBRA or a short term plans and then get a new job that does not offer benefits. And your health is not as good for some reason.

Now it is harder to qualify for permanent insurance. You would have been better off to purchase a permanent HSA type plan and avoid future pitfalls.

Otherwise, you are taking some risks with future insurability.

Good point.

The only foreseeable work I would be doing without health benefits would be contract-type positions. Beyond that, I'm at a professional level where health benefits are pretty much par for the course.

[Daylily]

COBRA all the way. That's what I did when I was unemployed and I was paying $800-ish a month to cover two people for seven months.

There was just an article in my state's Sunday paper about a 31-year old who took out a 6-month short term policy while she was unemployed. A couple months into the policy she found out she had breast cancer. The insurance company would not renew the policy after the initial six months. She is now without health insurance.

It's just not worth the risk to me. Clearly others feel differently.

[Exile]

I very recently became unemployed. As such, I have to make some decisions about my health care for the immediate future. I see pretty much three viable options:

A) Meh . . . who needs health insurance anyways?

I hope that you were joking about this option. Regardless if you're young and healthy, what good will that do if, say, you get hit by a car?

Before retiring, there were times when I had no other but option to go with COBRA which was then prohibitively expensive. If you can get it at the rate that you mentioned, go for it. Short term plans = short term benefits.