I often hear from readers who’ve lost their jobs in their 50s or early 60s to layoffs or involuntary “early retirement.”

It’s a very stressful time all around, but finding health insurance is one of the biggest challenges. Coverage from former employers is on a countdown to expiration or already is gone. Medicare benefits are years away, and people worry that pre-existing medical conditions will make it impossible find coverage.

Medicare could ride to the rescue sometime in the next few years. Although the program faces serious financial problems, Medicare is a proven, efficient program for delivering health care services. And wider Medicare eligibility might even help ease the program’s solvency issues, since it would bring younger, healthier people into the premium-paying pool.

Some experts have suggested opening up Medicare to people younger than 65.

Says Vicki Gothlich, a senior policy attorney at the Center for Medicare Advocacy in Washington, D.C. “It would take care of a large number of uninsured people, and it would help address Medicare’s solvency issues, since it would bring in a large group of people paying premiums at a time when they’re relatively healthy.”

But Congress won’t look at the problem seriously until 2009 at the earliest, and the idea could get wrapped up in a broader debate about health care reform. Implementation of any solutions are several years away, at best.
What can you do in the meantime if you fall into the pre-Medicare health care gap? Your options aren’t great, but there are solutions worth exploring. Here’s what you need to know:

–Your COBRA coverage doesn’t have to expire. The acronym is short for The Consolidated Omnibus Budget Reconciliation Act of 1985—a law requiring most employers with group health plans to let employees keep participating if they’re laid off, terminated or experience some other change in employment status. As a COBRA participant, you pay 100 percent of the premium, but at least you get the benefit of your employer’s group insurance rates and benefits. (See this page at the U.S. Department of Labor’s website for a handy FAQ on COBRA.)

Most people think COBRA is available only for 18 months after leaving a job—but that’s a myth. Under the law, employers are required to offer insurance for 18 months, but there’s nothing preventing them from permitting employees to participate indefinitely.

“It’s probably the most pervasive misperception out there about COBRA,” says Steve Hitov, managing attorney at the National Health Law Program, a public interest law firm that works to ensure low income people have access to high quality health care.
Consider asking your former employer to continue COBRA coverage until you become eligible for Medicare. Says Hitov, “Since the cost of COBRA is covered entirely by you, it’s something an employer should be willing to do—but you may have to negotiate to get it.”

Premiums under COBRA usually are lower than the rates you’d pay if you go into the market to buy an individual policy. And, since you’re continuing your existing coverage, you don’t have to worry about qualifying if you have pre-existing health conditions. But that doesn’t mean it’s cheap. Monthly premiums ranging from $300 to $500 or more are common; the specific price can vary considerably, depending on your employer’s plan, whether you’re insuring yourself or a family, and deductible levels.

–You can buy an individual policy. You may be able to buy a policy yourself through an HMO or through an association membership. Examples include the plans offered by AARP, professional associations and clubs. Sometimes these plan premiums are less expensive than COBRA coverage, but the coverage may not be as extensive. And under federal law, an insurer cannot turn you down for pre-existing health conditions so long as your break in coverage doesn’t exceed 63 days. Unfortunately, insurers aren’t prohibited from charging you a much higher premium if you do have a pre-existing condition.

–Some states are prepared to help. Certain states offer insurance to individuals who are unemployed and don’t have access to coverage under COBRA. Premiums are lower than COBRA rates, but the programs have limited funding and there may be a long waiting list. You can find a list of states that offer insurance programs at the website of the National Association of State Comprehensive Insurance Programs.

–Medicaid or the V.A. may be an option. Each state sets its own rules for maximum income and assets that you can have and still qualify for Medicaid, which provides coverage to very low-income people. “A few states have done away with their resource limits, but not many,” Hitov says. “It’s not an option for someone who has worked most of their life and saved something.”

If you’re a veteran, you can access a wide range of health care services through the Department of Veterans Affairs. But you’ll have to receive treatment at a VA facility, and coverage for family members is very limited. More information is available at the VA website.

Related posts:

1. Healthcare, Social Security: Going to the Q&A
2. How to cope with COBRA subsidy uncertainty
3. Misunderstandings are rampant on health care reform and Medicare
4. Reader mailbag: Stay on COBRA or enroll for Medicare?
5. Pre-existing conditions? Health insurance options improve this year

Tags | COBRA, health insurance, Medicare