Continued: Job gone? Health insurance help is available

You've been laid off -- or are worried you will be. What to do about health insurance?

As the seismic shocks on Wall Street ripple out across the country in the months ahead, it's a question that more people are going to have to grapple with. Jobless claims are at a seven-year high. Two-thirds of Minnesotans get their health coverage through work, with premiums heavily subsidized by employers. When the job goes, so does the coverage.

Insurance brokers in Minnesota say they haven't seen an uptick in calls from people who have lost their jobs, but they say they expect to. The good news, they say, is that there are more coverage options than ever in the individual market, especially for those willing to take on high deductibles.

"People in Minnesota have more choices than other parts of the country about gap coverage if they are looking for other jobs," said Donna Zimmerman, a vice president at Bloomington-based HealthPartners, the state's third-biggest health insurer.

Testing the individual market for the first time can be daunting. Judith Condon of Fridley knows that firsthand. Condon lost her job as an activity director working with Alzheimer's patients at an adult day-care facility in Minneapolis in early September.

She used to pay $108 a month toward her health premiums, with her employer paying the rest. She considered hanging on to that group coverage for a while, but balked at the full premium of $460.

Instead, she called an insurance broker. "At 59, it's harder to get a good policy," said Condon, who takes a generic blood thinner and low-dose antidepressants.

After poring over her options, she ended up applying for a policy with the lowest premium she could get, a plan from Blue Cross and Blue Shield of Minnesota with a $244 monthly premium and a $5,000 annual deductible.

She is looking for work but worries that her age will count against her. Her old policy recently expired, and she is still waiting to hear whether Blue Cross will insure her.

Individual tradeoffs

In a group plan, premiums and benefits are negotiated by the employers and insurers, and employees are typically presented with just two premium levels, single and family. A 60-year-old who has heart disease generally pays the same premium as a healthy 25-year-old.

Not so in the individual market, where there is a dizzying range of premiums based on age, health and richness of benefits. Because age is a given and health is only partly controllable -- smokers get slapped with significantly higher premiums than nonsmokers, for example -- the only significant variable consumers can tweak is the level of benefits they want. Plans with drug benefits cost more than those without. Lower premiums come with higher deductibles, and vice versa.

"What really drives the decision is how much they want to spend," said Mike Maguire, an independent benefits consultant in Eden Prairie. "If you want first-dollar coverage, it's going to cost you."

The COBRA option

Insurance brokers stress that every individual is different, but they have some general advice.

First, don't give up existing insurance before you get new coverage. Even if you get a new job, it may be as long as three months before benefits kick in.

Under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, laid-off employees can continue to get group coverage through their former employers for a limited time.

But COBRA can be expensive. Employers pay on average 75 to 80 percent of health premiums, and employees often get sticker shock when presented with the full premiums.

For someone in the midst of receiving care or who has a chronic condition, COBRA may be a good option. "It buys you a little bit of time," said Bob Schmitz, president of Schreifels & Associates, a benefits consultant in Brooklyn Center.

But it isn't the only option.

If you are healthy and confident you will get another job soon, short-term insurance lasting 30, 60 or 90 days may be better. It's relatively cheap, is offered by all the major insurers, doesn't require underwriting and usually is obtainable within 24 hours.

One big caveat is that short-term policies don't cover preexisting conditions. If, for example, you have high blood pressure, that's considered a preexisting condition; if you happen to have a stroke, treatment costs are not going to be covered. A short-term policy is best thought of as catastrophic coverage in case you break an arm or unexpectedly land in the hospital.

If you don't know when you'll be employed again, there is a range of individual plans in the market with varying benefits and deductibles. Many of the skimpier plans, for example, don't include maternity, dental or vision benefits. Some allow you to link to a health savings account; some don't.

In recent years, the major insurance companies in Minnesota have introduced their own versions of the skinnier plans. There's Simply Blue from Blue Cross and Blue Shield of Minnesota; Solo from Medica; and HealthPartners' Three-for-free, which refers to three free doctor-office visits. All have monthly premiums starting at less than $100 for nonsmokers in their 20s and are pretty comparable, Maguire said.

If you are turned down for insurance in the individual market because of a chronic condition, your last resort is the Minnesota Comprehensive Health Association, a high-risk subsidized pool. Premiums are higher than in the individual market, but are capped at no more than 125 percent of comparable policies.

A spreadsheet of options

Throw a child or two into the mix and things get more complicated.

John Frederick was laid off in June from Zareba Systems, a manufacturing company in Plymouth, where the 52-year-old was executive vice president overseeing sales and marketing. His health coverage runs out at the end of this month.

Frederick had been laid off before, in 2002, but there were far fewer options then. At the time, he went with COBRA coverage. This time, his insurance broker came bearing an Excel spreadsheet.

He applied for a Medica plan with a health savings account. The premium for him, his wife and his college-age daughter is $700 a month and it comes with a $5,500 deductible.

But even with diligent planning, individual insurance can be a shot in the dark. Frederick has already heard from his broker that his daughter has been rejected, though they don't know why yet. He's now working on getting her coverage continued through COBRA for the gap before benefits kick in at her new job. Meanwhile, he's still waiting to hear if he and his wife will be accepted.

"The story's not over yet," he said.

Chen May Yee • 612-673-7434