INSURANCE

A job loss has myriad financial implications beyond the loss of a paycheck. If you've lost your job and all your benefits, here are strategies for filling in the gaps.

This can be a scarier prospect than even loss of income, especially if you or your family have medical problems and doctor or prescription drug bills that would sink you.

Your first step is to investigate whether you are eligible to continue your group health insurance under COBRA. This is a federal law that says employers with 20 or more employees must offer a continuation of health benefits for up to 18 months to workers who are laid off. Your employer will likely no longer pay the premiums and can charge you 100 percent of the premiums due plus a 2 percent administrative fee. Still, those are group rates and are likely better than what you'd pay for an individual health policy.

And you don't have to make a quick decision: Federal law says you have 60 day to decide on whether you want to continue your group health benefits.

If your company has less than 20 workers, you may still be in luck: Many states have "mini-COBRA" laws that extend similar benefits to workers at companies with two to 19 employees.

COBRA has extra importance: It can protect you from having your medical conditions excluded at your next job. This is where another federal law, called the Health Insurance Portability and Accountability Act (HIPAA), comes in: If you've had "creditable" health insurance for 12 straight months, with no lapse in coverage of 63 days or more, your next group health plan cannot invoke a pre-existing condition exclusion. It must cover your medical problems as soon as you enroll in the plan. By electing continued coverage through COBRA, you can make sure you don't get that 63-day gap.

One warning: If your company goes out of business, continuing your health insurance under COBRA isn't possible because your "group" no longer exists. You could take your chances and wait to get a new job with new group health benefits. If you can't wait, consider short-term health insurance or an individual health insurance policy (despite its name, families can be insured under an "individual" health policy).

If you have carried group life insurance through work, a job loss ends that coverage.

According to the Employee Benefit Research Institute, 73 percent of employees eligible for group life insurance take advantage of it, among those employed at medium or large private companies.

If this happens to you, your first wise move is to look into purchasing your own life insurance policy, whether it's term life insurance or whole life insurance. Term life insurance rates have been declining steadily for many years, so it's a good time to secure life insurance coverage that is yours no matter where you work.

For folks with serious medical conditions, though, buying a private life insurance policy may not be an option. There's one way to prevent this, but you have to make your move before a job loss: You can convert your group life policy to an individual permanent policy without going through a medical exam. Jack Dewald, spokesperson for the Life and Health Insurance Education Foundation, notes that you won't be able to increase your coverage amount - for example, if you have $25,000 in coverage through work, that would be the maximum benefit you could choose for your conversion.

Now here's an important insurance coverage that you may not be able to replace after a job loss - except by getting another job that offers it. Disability insurance pays a portion of your salary if you are unable to work due to illness or injury (excluding on-the-job injuries, which are covered by workers compensation insurance). Consider this: If you don't have a job, you have no income to "replace" with a disability policy.

Disability insurance is important because of the frequency of such troubles: According to the Council for Disability Awareness, three in 10 people entering the work force today will become disabled before retiring. Also, one in seven people can expect to be disabled for five years or more before retirement.

Unfortunately this is coverage that you are unlikely to be able to buy on your own; it is generally offered only as a group workplace benefit.

Many companies have deals with insurers that give group discounts on car and home insurance to employees. These are known as "affinity" programs. But when you lose a job, you won't be eligible for that affinity discount at your next renewal time.

Liberty Mutual, for example, offers car and home insurance discounts through more than 10,000 affinity programs around the country. Spokesperson Greenberg explains that "if you lose your job during the course of the policy, you would maintain the discount until your renewal period. Many of our [affinity] customers pay their premiums through payroll deduction. It then becomes direct bill, but the premium is not adjusted until the end of the policy period."

This doesn't necessary mean your insurance bill will go up. Greenberg notes that Liberty Mutual has so many affinity programs - through employers, credit unions, alumni associations and professional groups - that they can often identify another affinity discount for the customer. "We work with customers to find out if there are other discounts they’re eligible for. It works in our customers' favor many times. Many of our customers do qualify for another program," he says.