Group health insurance -- most commonly sponsored and subsidized by an employer -- is almost always a person's best bet, though many companies are cutting benefits and increasing workers' costs as premiums soar.
If you're in the individual insurance market, it's important to shop around since coverage options and premiums vary widely depending on the carrier, the design of the plan and your health status and age. Here are some factors to consider:
* COBRA benefits Should you leave your job, get laid off, retire or see your hours cut from a job where you got health insurance, a federal law known as COBRA may allow you to remain in your employer's group for 18 months. The law applies to most employers with 20 or more workers, and some jurisdictions extend this "continuation coverage" protection to other people. For example, the District provides three months of coverage to those who worked for smaller employers, while Maryland requires coverage for such people for 18 months. Virginia does not offer similar protections.
Pro COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1986, provides a way for people, particularly those with medical conditions, to retain coverage until they find other insurance.
Con COBRA is expensive, since the individual pays the full cost of coverage (his own share as well as the company's subsidy), plus up to a 2 percent administration fee. In 2003, HMO coverage via COBRA cost an average of $3,200 for an individual and $7,200 for a family, according to Mercer Human Resources Consulting. People buying traditional insurance coverage through COBRA paid more than $3,750 for individual policies last year and $9,200 for family plans.
* HIPAA eligibility Another federal law, the Health Insurance Portability and Accountability Act (HIPAA), allows those who don't qualify for COBRA or who exhaust its benefits to convert to an individual insurance policy of their choice, regardless of their health status.
Pro This is particularly valuable for those with health conditions who would otherwise not get coverage in the individual market.
Con Premiums for so-called conversion policies aren't regulated under federal law. While Maryland caps the cost of such policies, the District and Virginia don't. District residents who are rejected by other insurers can buy more affordable "open enrollment" coverage.
* Self-employment policies Being self-employed gives you more options than the typical individual has. In Maryland, the self-employed have a guaranteed right to buy coverage, regardless of health status, at certain times of the year. That's not the case in Virginia. All District residents can buy guaranteed-issue coverage without medical underwriting year-round. Some insurers extend small-group coverage to self-employed individuals in some situations.
Pro The self-employed can deduct 100 percent of insurance premiums when buying in the individual, small-group or association markets. And for self-employed people eligible for medical reimbursement plans, the family's health bills other than premiums are fully deductible. (Consult your accountant or insurance broker.)
Con The individual, small and association markets can be risky -- particularly for unhealthy people -- and don't have protections afforded in the large group market. For example, group health plans cannot reject you based on your health status, whereas an insurer in the individual market can refuse to offer you coverage.
* Association coverage Some professional groups and interest- focused organizations offer health plans that allow individuals access to group insurance.
Pro Policies deemed "creditable coverage" give you some protections should you buy in the individual market later.
Con Be careful. This market is prone to scams. And such products may not be regulated by your state's insurance department.
* Last resort options If you're sick when you enroll or get sick later on, the individual market is unfriendly. That's when last-resort policies may be your only choice. Blue Cross and Blue Shield offers such plans in the District and Virginia; Maryland's high-risk pool is called the Maryland Health Insurance Plan (MHIP).
Pro Marylanders buying from MHIP enjoy enhanced protections and limits on premiums, while any District resident can buy a high-deductible "open-enrollment" policy from CareFirst at relatively affordable rates.
Con Virginia residents buying a product of last resort face steep premiums.
-- Christopher J. Gearon