How to Choose Between an HMO and PPO Health Plan When Your COBRA Health Insurance Coverage Expires
Due to the challenge associated with obtaining health care during bouts of unemployment, the federal government decided in 1986 that there was a need to provide protection to these unemployed people. As a result, COBRA (or the Consolidated Omnibus Budget Reconciliation Act) was passed. As long as the unemployment was not due to ‘gross misconduct’, this law allows people who voluntarily resign, are laid off or terminated the right to extend their health insurance coverage for up to a year and a half at their expense.
In order to qualify for COBRA health insurance coverage, there are a few conditions that need to be met. First of all, your former employer had to have a group plan that a minimum of 20 employees were enrolled in, including yourself. You had to be working for that employer and a member of that plan for at least six months, too. If you qualify, your spouse and dependents are also eligible for COBRA continuation of coverage benefits, even when you decide against this coverage for yourself. Depending on the specifics surrounding your unemployment, you can get up to 36 months of COBRA.
But COBRA continuation of coverage benefits is not cheap; you will have to pay up to 100% of the premiums plus a 2% administrative fee, which can eat up as much as 84% of the average unemployment benefit check. Of course, you can apply for assistance to pay your COBRA premiums under the American Recovery and Reinvestment Act of 2009, which will give qualified participants a 65% subsidy to pay premiums, but this will only last for nine months or until the end of your COBRA benefits period, if you elected to join COBRA late.
Before your COBRA continuation of coverage benefits expire, you should take a look into the purchase of an individual policy for yourself or any other person who was covered under your COBRA benefit. Private policies come in the form of HMO and PPO plans. Though you may not be familiar with these plans, these are common health health insurance terms for managed care systems. If you are a member of an HMO (Health Maintenance Organization), you have one specific physician who acts as the gateway to all other heath care services you may need. In opposition, being a member of a PPO (Preferred Provider Organization) means that you can acquire care from any doctor in your network.
The pros and cons associated with HMO vs PPO insurance are simple to understand. Typically both of these plans are affordable, so cost is not normally a deciding factor. If you have a medical professional you happen to trust with all of your health concerns and you value preventative care, a HMO would be good for you. If you are one who would rather have freedom in your health care choices or may want to go to various specialists within your network, the PPO plan is a better choice.
Learn more about PPO vs HMO insurance. Stop by Kristaria Dawson’s site where you can find out all about HMO and PPO health plan options.