Quick! Grab Your Health Insurance Benefits, Before They Expire

Just a wild guess: I bet most of you are getting pretty sick of hearing about all things healthcare.   Well, rest assured, I don’t plan to dive into a discussion of how to fix the system, and I promise not to yell out at a town hall meeting, in a joint session of Congress, at the Video Music Awards, at the U. S. Open…  or anywhere else.

But I do have an important health care-related message for you and your financial plan:  If you’ve been putting off going to the doctor for something, go do it now before your coverage gets any sparser and it ends up costing you more. When I talk about coverage getting sparser, I’m not talking in the global sense, but on a “per individual”/”per family”, near term basis.  And I bring this up here and now because both year-end and, unfortunately, career change can be a trigger for this.

True, even people keeping the exact same job pretty much expect to see fewer benefits at higher cost each year when open enrollment season rolls around.  But the risk of reduced coverage is greater still when changing careers.  The obvious situation is a move from an industry that has comprehensive benefits to one  that doesn’t.   Maybe your spouse’s insurance can make up the difference; maybe not.

Or consider involuntary career changers.  Those workers who’ve been laid off often face a choice between paying astronomical premiums to stay on COBRA or dropping down to a much less comprehensive plan.   Yes, the COBRA subsidy included in the American Recovery and Reinvestment Act of 2009 has been a big help, but this job market is brutal and many are remaining jobless long enough to see that benefit expire.

Even 8+ years post-career change, I myself keep running up against this as a self-employed.  Every November when my renewal package comes, I steel myself for an eye-popping increase to what is already a sky-high premium.  Sometimes I swallow hard and accept the new rate; other times, I opt to “self-insure” for more things, i.e. downgrade to a lousier policy.

This year, I already know I’m in for a bigger-than-usual wallop.  Why’s that??  I’ve reached a birthday that qualifies me for a new “rate class”, as they say in insurance jargon.  i.e. I’m older enough that stats say I’ll be costing the insurance company more so they have to increase my premiums by even more than the inflation-beating annual percentage to which I’ve grown accustomed.    Argh.

Health insurance for the self-employed, or anyone who’s not in a very secure long term job (read: almost everyone), is not for the faint of heart, that’s for sure.   I’m sorry to say I don’t have a good answer for any of this, one of the most vexing challenges facing career changers.  But it seems clear that each of these “little” gaps in the current system add up to a solution that really doesn’t match the way the world of work is evolving.  In my wildest dreams, I hope that we — the collective “we”, that is – can do something to close that distance sooner rather than later.  In the meantime, at the very least, be sure to make the absolute most of the benefits you have now before you reach some milestone and they become a treasured memory of the good old days.  Stay well!

About the author

Sherrill St. Germain, CFP®

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