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When Is COBRA a Good Choice?

A friend of mine recently quit his job.insurance coverage you were getting
The position was a contract position,under their policy for up to 18 months
and the insurance would not becomeafter your last day. Here are the
effective for six months. Since he hascatches, though:
diabetes, he really wanted to know what
his options were. How could he continueYou cannot alter the amount of coverage
to receive health care without spendingyou receive. If you were covered for the
a small fortune in the interim?Ofworks before you left, then you'll have
course, he began asking us about theseto be covered for the works until you
things, and we had to be honest withcancel COBRA coverage.
him. First of all, COBRA is a veryIf you leave the policy for any reason,
useful legal tool, if you have no betteryou're done. Don't miss a payment! and
options. However, it is best to do somedon't release yourself from the program
homework and find a reasonable insuranceuntil you are completely covered by
company. You can then purchase aanother policy and that policy is in
short-term policy for yourself duringeffect.
the time that you will not otherwise beYou only have a very small window of
covered. COBRA can be very expensive,thirty days from your last day to elect
and since you cannot reduce the amountCOBRA coverage.
of coverage you have with COBRA, you mayWhile COBRA coverage is offered to you,
end up paying for items in your policyit does not take effect until you sign
that you don't need simply to maintainup for it, in writing.
healthcare coverage.Why do you need toAnd the final catch: You pay 100% of
maintain healthcare coverage? Becausethe monthly premiums.
most policies have a clause aboutIn most places, the employer graciously
pre-existing conditions. The terms forpicks up a portion of the monthly
"pre-existing" differ from policy topremiums, usually from 40% to 75%. In
policy, so read your current policy veryvery very rare cases, an employer will
carefully, and your new policy veryactually pay 90% or more of the monthly
carefully before making anypremiums. But if you elect COBRA
decisions.For pre-existing conditions,coverage, you agree to take on the full
the general rule of thumb is : If you'vemonthly premiums, at your own cost. And
been without insurance for 30 days, anydon't be late with your monthly payment.
illness or condition at the time youIf you are, they can cancel you
sign your new policy is consideredimmediately, and there is no second
"pre-existing", and thus is not coveredchance to sign up again.Just because
by your current policy. Which means,COBRA must be offered to you, doesn't
that any life-long condition -- such asmean you get it automatically. You must
diabetes or epilepsy -- can bechoose (in writing) to accept the COBRA
considered pre-existing. Once yourcoverage, and fill out the necessary
condition is labeled pre-existing, itpaperwork. Speak with your HR department
can be excluded from your healthcarefor what paperwork your particular
coverage under the current policy, eveninsurance requires.After all of this
if you pay your monthly premiums.Becauseinformation, he chose to keep his COBRA
of his medical condition, he found thatinsurance for the six months until his
getting private insurance was going tonext insurance policy took effect. He
cost him a small fortune each month.payed over $1000/month for himself, wife
Normally we suggest that a person use aand four children. It sounds like alot,
work policy from their spouse. Leavingbut in order to prevent any
your job constitutes a "Life Change","pre-existing condition" clauses, and to
and can bypass most policies'be prepared should something happen
once-per-year change of coverage clause.during the six-month window, he chose to
However, his wife does not work. He ispay the price instead of rolling the
the sole income provider for hisdice.If you find yourself looking for a
household. Taking all of this intonew position, or just an exit of your
consideration, we definitely suggestedcurrent job, be aware that COBRA exists
that he take advantage of the COBRAto help you. In many cases you can find
coverage.What is COBRA? It is an acronymalternate forms of insurance, such as a
for Consolidated Omnibus Budgetspouse's policy or a less expensive
Reconciliation Act. But that usuallyprivate label. But in some cases, COBRA
means nothing to laymen like us. Inreally is a good alternative. It can
short, it is a continuation of benefitscost you a little in the short-term, but
federal act. The part that effects ussaves your insurance history in the long
states, in short: If you are insured atterm.Jerry Hanel is co-owner and
work and there are more than 20Technical Advisor to InsuranceQNA.
employees, they must offer the same



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