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Health insurance premiums on the rise

February 18, 2010 12:00:00 AM PST
COBRA coverage is being subsidized by the federal government, but there are limitations and it doesn't last forever. And current health care proposals in Congress have not been finalized. In the meantime, consumers can turn to the Internet to shop for health insurance.Rachael Wheat has her hands full with two young boys. Jackson and Carter rely on their mom for everything, including their health care. But a few weeks ago her full-time accountant job was cut to part-time and her health insurance was cut completely.

"I had the choice to go on COBRA, but that was before they subsidized the program," said Wheat. "So if it was subsidized it would of been a good deal, but without it being subsidized it was too expensive."

For the past year consumers were able to get COBRA for 65-percent less because it was subsidized with part of the president's stimulus package. But that subsidy lasts only 15 months and then the premiums go back up.

Unfortunately, Rachael's job change happened before the subsidy so she couldn't afford COBRA at all.

"I think it was going to be about $400 a month," said Wheat.

Sam Gibbs, a consumer health insurance expert with eHealthInsurance.com, says most consumers like Wheat can find a good health plan and save money by shopping for coverage online.

"You go to our Web site and put in some basic information like your zip code, birthday and your gender," said Gibbs. "Once you do that you can collect all of the plans that are available in your area by your zip code."

In California, most consumers will find over 150 plans to choose from all with very different pricing. On the Web site you can do a side-by-side comparison of each of the plans, and there is a tutorial to help you understand the terms of the policy.

But besides the premium Gibbs says there is another number you will want to focus on, and that's your maximum out of pocket expenses per year.

"That's the one you need to focus on whether it is a deductible, co-pay or office visit," said Gibbs. "That is your budget number. So every year if you have a maximum out of pocket of $2000 then you know no matter what happens to you that is your maximum."

But sometimes you may want to go with a policy with higher out of pocket expenses because it is one way to lower your premium. It's like raising the deductible on your car insurance.

Wheat told me she shopped around online and found the perfect policy for her family, and now she's saving quite a bit.

"I pay $174 a month now," said Wheat.

Rachael's COBRA policy was going to cost her $400 a month, but her new policy she found online is costing her only $174 a month. That's a $226 a month savings, huge for single mom Rachael Wheat.

Although eHealthInsurance is a licensed agent to sell health insurance you're not required to buy it from them to search their Web site. But you should know insurance premiums are fixed by law.