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Laid-off workers face insurance crunch
Darrow Frazier of Irving, Texas, listens to his daughter, Cassie, 8, practice the violin as son James, 6, takes in a game on his Xbox. Frazier is navigating the twists and turns of health care coverage after being laid off a second time and working on a part-time contract basis for his former employer.

DALLAS - For the second time in two years, Darrow Frazier is without health insurance. In 2006, the 42-year-old Irving, Texas, man was laid off as a project manager building railroad cars. In August, his employer reassigned him to be a contract employee, which doesn't include benefits. Frazier, whose wife is not offered health insurance through her employer, is now nervous. He drives more cautiously, fearful of accidents.

"If my kid needs major surgery because something comes up, what do I do?" asked Frazier, father of an 8-year-old and a 6-year-old. "I basically go bankrupt."

The country's yearlong recession has led to a barrage of job losses. For many laid-off workers, it's the first time they've had to confront a forced change to their health care coverage.

What should they do?

The federal government makes health care provisions for laid-off workers through the Consolidated Omnibus Budget Reconciliation Act of 1985, which extends health insurance coverage from your former employer for 18 months.

Keith Peterson, 33, of Dallas was laid off in early December from a Philadelphia-based drug manufacturer. He passed on COBRA insurance because it would have cost $1,200 a month.

In most cases, COBRA costs just as much as the company's subsidized insurance plan. But with COBRA, the individual pays the entire premium without the company's help. It's normal for monthly COBRA premiums to be more than double what a person paid while employed.

Peterson's company-provided health insurance for himself, his wife and 2-year-old daughter ran out Dec. 31.

"I've got to figure something out," he said last month. "Maybe catastrophic insurance on myself and just something on the wife and little girl."

He said he was eyeing a short-term individual policy from Blue Cross Blue Shield that would cost him around $100 a month, but he wasn't sure.

But big insurance carriers may not always be best, said Reid Rasmussen, an insurance carrier relations manager with Dallas-based BenefitMall, a resource for employee-benefits brokers.

"Health insurance policies are like different flavors," Rasmussen said. "Maybe the biggest company doesn't have the flavor for your situation."

Rasmussen, who also is a member of the Dallas Association of Health Underwriters, recommends finding an insurance broker to help navigate through different options after a layoff.

"That's what they're there for," Rasmussen said.

"Without them, you might end up paying too much, or buying more insurance policy than what you need."

Options for individuals mostly have been limited to high-deductible plans, short-term policies or traditional co-pay plans. But UnitedHealthcare launched a plan in December month with laid-off workers in mind.

The insurer's UnitedHealth Continuity plan allows members to apply for and lock in health insurance today while they are healthy but not use the coverage until they retire or become self-employed, unemployed or move to a job without benefits.

The plan allows individuals to turn the insurance on or off as their needs change, and they can do it as many times as they want, said Richard A. Collins, chief executive of UnitedHealthcare's Golden Rule Insurance Co., which offers the plan. When the insurance is inactive, the member pays 20 percent of the premium.

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