Health Care Prescriptions for a Terminal Job

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In 1991, corporate "down-sizing" was an unfortunate fact of life for many workers, including technical communications professionals. While we all hope that 1992 will show an improved economic picture, early signs point to continued layoffs in many industries. What do you do about medical insurance coverage if you are laid off?

Most industrialized countries have national, or at least portable, health insurance plans. If you lose or change your job, your health insurance remains intact. In the United States, we continue to have a medical insurance system that is primarily employer based. Company-paid medical insurance plans often end when your employment terminates.

In some cases, your employer may offer to provide and pay for all or a portion of the cost of an extended benefits package that might include some combination of medical, life and disability insurance coverage. The generosity of such severance packages is often based upon factors such as how long you have worked for the company, your age or your position with the firm. In many cases, you are on your own. This article is a summary of some of the alternatives for those who are not offered employer-subsidized extended insurance benefits when leaving a job. These options may also apply when your subsidized severance benefits end.

One option is to convert your group health insurance to an individual plan. Most group plans include conversion provisions, and some state laws require them. Conversion is often an expensive proposition, since the premium may be many times the cost of group coverage and, at the same time, the level of coverage is often reduced. However, if you or someone in your family is disabled or has a pre-existing condition that might prevent you from obtaining insurance elsewhere, the cost might be justified.

If you are laid off or resign from your job, and your employer had 20 employees or more on at least 50 percent of its working days during the year, federal COBRA laws require that you be offered the option to continue your medical coverage for up to 18 months under your former employer's plan. You can be required to pay up to the total cost of your group insurance premium, plus a 2 percent administrative charge. Usually there will be strict requirements that your premium be paid in advance and received on a timely basis. After 18 months, you may have the option to convert to an individual policy, as described earlier. (Some states have laws, similar to COBRA laws, which require your employer to offer continuation of coverage for between three and 18 months, even when your employer has less than 20 employees.)

Another option is to purchase a permanent individual insurance policy that is not linked to your current group insurance. If you are young and healthy, these plans can be reasonably priced, especially if you are willing to share the risk with a high deductible limit. However, insurers will look closely at your medical history, and even minor health issues can raise the cost or prevent you from obtaining coverage.

Some insurance companies offer short-term medical protection plans specifically for those who are between employment or laid off. These programs often provide coverage for between 30 and 365 days and have limited renewal provisions. You select the length of coverage when you buy the policy and there is often no refund of premiums if you obtain coverage elsewhere before the policy expires (although coverage continues for the full term of the policy). The premiums are lower than those for permanent insurance, but benefits are more limited and the eligibility requirements are strict. These plans can be good for people who are in good health, want protection against catastrophic illness, and are confident that they will need coverage for only a short period of time.

Membership in some professional organizations -- including STC -- may make you eligible for group rates on medical insurance policies offered to their members. There are a number of small-business and industrial associations that have group plans through various insurance carriers. Eligibility requirements can be strict, but coverage is usually comprehensive. Many organizations obtain coverage through the "Blues" -- state Blue Cross and Blue Shield organizations. The annual cost to maintain your membership in the organization, even if you are unemployed, may be much less than the savings you realize if you are eligible for coverage through the group. (As a member of STC, you can apply for protection through Mutual of Omaha Insurance by calling 1-800-624-5554. Mention that you are a member of STC and interested in association group rates.)

Certain states offer additional medical insurance options for the unemployed. In Massachusetts, for example, the Commonwealth's Health Security Plan provides two health insurance options to unemployed workers whose family income during the previous 12 months was below three times the federal poverty level. In 1991, the cutoff was roughly $31,000 for a family of three, and it will be in the area of $33,OOO in 1992. Everyone who files an unemployment claim is given information about the program. Those eligible are provided with either direct insurance coverage (entitling them to receive services, with co-payments and deductibles, at the health provider of their choice) or a subsidy of a portion of their COBRA insurance premiums.

An important final note: This is a summary of information I have collected as a personnel placement professional, not as an insurance professional. Please talk to a licensed insurance professional and to your employer's insurance specialist before making important decisions about your medical insurance coverage. In addition to preexisting conditions, factors such as disability, divorce, separation or death will also affect continuation of your coverage or the coverage of other family members under your plan.

Brett Randolph, who has been marketing contract technical communications services since 1973, is a partner in Randolph Associates, Inc. in Boston, Mass.