Some Relief from the High Cost of Health Insurance

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A couple of Kenison's clients in their early 60s recently left or lost their jobs, so they needed to find health insurance to cover them until they qualify qualify for Medicare at age 65. "I just helped a guy, aged 62, who left his job—they offered COBRA at $1,700 a month for him, his wife, and daughter. I found the same coverage from Blue Cross Blue Shield for $900," Kenison says. You can lower your cost by finding an individual plan with higher deductibles and co-pays, as well as a separate annual deductible for prescription drugs, he says. (If you choose a plan with a higher deductible, make sure you have enough money socked away to pay for health expenses until you meet the deductible.) Kenison has found lower-cost alternatives from Humana, Blue Cross Blue Shield, and Coventry Wellpath.

Pre-existing Conditions

If someone already has medical trouble, such as high blood pressure or heart conditions, they're going to find it much more difficult and expensive to get health insurance. One of Kenison's clients who has diabetes chose a limited benefits plan from AIM Health, which will cost less than the $1,200 a month policy quoted from Blue Cross Blue Shield, he says. But not all limited health plans are alike, and some may not cover you for emergency services or surgery, so make sure you evaluate what the plan covers for the lower price.

If you're not eligible for COBRA or can't find an individual plan that fits into your budget, check your local or state government to see if they have a group health plan. Some professional organizations also offer group plans.

Older people still working can also check to see if their employer is one of the 51 companies (including UPS (UPS), DTE Energy (DTE) and Lowe's (LOW)) that offers Retiree Health Access (RHA). This is an Aetna (AET) health plan launched in January 2008 by the HR Policy Assn., a human resources group that represents 260 large employers. The RHA plan is available for pre-retirees as well as people over 65, and it cannot reject early retirees for coverage regardless of health problems. Premiums do not rise for older retirees or retirees who are sick. Premiums for an individual policy range from $400 to $1,000 per month, depending on whether an employer is subsidizing the premium and the type of policy chosen.

The association is developing a new version of RHA called "RHA Connector," in which employers will be able to offer all of the coverage options available from Aetna, with additional coverage options offered by other insurers for retirees who are eligible for Medicare. The association plans to launch this new alternative in 2011.

McCormack is senior producer for BusinessWeek.com's Investing channel.