Short-Term Medical Insurance Offers COBRA Alternative

2009 APR 20 - (NewsRx.com) -- As the job market declines, the population of uninsured Americans swells. And paying for health insurance, along with everything else, weighs heavily on a multitude of minds these days. When it comes to options, COBRA may be the buzzword, but a little-known alternative called short-term medical insurance (STM) may offer a more palatable solution (see also Health Plan Administrators).

Unemployment rose from 7.5 to 8.1 percent in February 2009its highest rate in more than 25 years according to the Bureau of Labor Statistics. A study by the Kaiser Commission on Medicaid and the Uninsured, April 2008, indicates that each one percent increase in the national unemployment rate leads to more than 1 million additional people losing their health insurance.

Through COBRA, employees who lose their jobs are able to continue employer-sponsored coverage for up to 18 months. However, they must pay 102 percent of the cost of the traditional health insurance premium for COBRA continuation coverage.

Relief seemed to appear in February 2009 when President Obama signed the $787 billion economic stimulus package, which included a subsidy covering 65 percent of COBRA premiums for the first nine months of unemployment. This assistance is available to eligible workers who have lost or will lose their jobs as a result of the current economic recession between September 1, 2008 and December 31, 2009.

Still, COBRA remains out of reach for many collecting unemployment checks and struggling to pay for bare necessities. Pre-subsidy annual COBRA premiums average $4,400 for individuals and $11,000 for families, according to Kaiser Family Foundation statistics.

At HPA, we understand that these are tough economic times. We understand that people are worried about keeping their job, and if they should lose their job, the struggle to make ends meet with COBRA premiums seems overwhelming, said Jim Kenneally, chief sales officer at Health Plan Administrators, a member of the IHC Group. We want people to know they have options, and that STM is a viable alternative.

Typically, STM premiums are significantly less expensive than COBRA premiums or premiums for an individual major medical health insurance policy. In addition to lower monthly payments, STM plans offer greater ease of qualification and enrollment. With STM, there is no lengthy underwriting process and the applicant can complete the entire process online within a matter of minutes. If approved after answering a handful of health-related questions, they will receive their approval confirmation, ID card and certificate almost instantaneously. Coverage may begin as early as the next day.

STM coverage periods may last as few as 30 days or as many as 12 months, depending on the state. Individuals who need to extend their coverage may apply again and get another policy; however, additional policies are considered entirely new and do not cover pre-existing conditions. That means illnesses or medical conditions developed and/or treated under the first policy will not be covered on the new one or any subsequent STM policies. Unlike traditional individual major medical insurance coverage and COBRA continuation coverage, pre-existing diseases and physical conditions are not covered under STM policies. And, while STM insurance would not count as creditable coverage toward any individual health insurance issued after an STM policy ends, an STM policy would count as creditable coverage toward group health issued to an individual after the temporary STM policy ends.

People who are in good health and anticipate the need for less than six months of coverage are typically ideal candidates for STM. Those with serious health conditions are unlikely to qualify. Anyone trying to choose between STM and COBRA continuation coverage under their current health plan can visit www.hpainsurance.com to determine their STM eligibility.


If there is any question in peoples minds about what they should do, it is always best to talk to an insurance professional, Kenneally advises.

Visit www.bls.gov/news.release/empsit.nr0.htm for the latest Bureau of Labor Statistics press release on the unemployment situation. About Health Plan Administrators Health Plan Administrators, Inc. (HPA) is an industry leader in short-term major medical (STM) insurance. Although STM is at the core of its business, HPA is also a well-respected provider of dental and travel medical insurance, in addition to offering an affordable prescription drug discount program. Founded in 1939, HPA celebrates an impressive 70 years in the insurance industry in 2009.

HPA, headquartered in Tampa, Florida, is a member of the IHC Group, an insurance organization composed of Independence Holding Company (NYSE:IHC) and its operating subsidiaries, including Madison National Life Insurance Company, Inc., Standard Security Life Insurance Company of New York and Independence American Insurance Company. The IHC Group has been providing life, health and stop-loss insurance solutions for over 25 years. For information on Independence Holding Company and the IHC Group, see www.ihcgroup.com.ejfg9k6nxv