Losing your job doesn’t mean losing health insurance. You have several options to get the care you need and protect against high medical costs from now until you start your next career chapter.
Stay the Course with COBRA
You can stay on your current plan if you enroll in coverage through the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA. Keep in mind that it is expensive.
You’re allowed to enroll in this federal program if you (a) were let go for any reason besides gross misconduct and (b) worked for a company with at least 20 employees. Even if you worked for a company smaller than that, your state might have its own “mini-COBRA” law that lets you use this coverage option anyway. Depending on your age, you can participate in COBRA for up to a year and a half, possibly longer.
Here’s how COBRA enrollment works. After letting you go, your former employer has 30 days to notify the insurer that you no longer work for them. The insurer then has 14 days to send you information on your COBRA rights and the next steps for enrollment. You then have 60 days to respond to the insurer telling them you’d like to enroll. The entire process can take three months or more. But once your enrollment becomes official, it will apply retroactively to the day your job-based insurance ends. In other words, as long as you plan to meet your enrollment deadline, rest assured that your COBRA insurance will cover any medical attention you seek in the days ahead.
By enrolling in COBRA, you can prevent even a short gap in your coverage and keep a level of care identical to when you were employed. But that convenience comes with a price. In most cases, you’ll have to pay the entire monthly insurance premium yourself (rather than sharing the cost with your employer as you did previously), plus a two-percent administrative fee.
Explore Cheaper Options on the Marketplace
You may find COBRA’s high premium costs are prohibitive, especially if it takes months to find your next job with health benefits. In that case, you’re better off exploring more affordable plans on the Health Insurance Marketplace. You have 60 days to select and enroll in one of these plans after your employer-based insurance ends. (If you miss this 60-day special enrollment window, you’ll need to wait until the Marketplace’s next regular open enrollment, which starts November 1st.)
Marketplace health plans can be much cheaper than COBRA if you’re among the many who qualify for a premium tax credit through the Affordable Care Act. By creating an account and entering your financial information, you can learn whether you are eligible for a credit and review the plan options available. The portal will also tell you if your income qualifies you for coverage through Medicaid rather than one of the regular Marketplace plans.
One potential downside of the Marketplace option is that it doesn’t go into force retroactively, unlike COBRA. At the very soonest, your new plan will start on the first day of the month following your employer’s health plan’s end date. For example, if your employer plan ends on July 6th, the soonest you can start a Marketplace plan would be August 1st. So you’d have to go without health insurance for those remaining 25 days of July. But you can stop that gap from occurring if you enroll in COBRA temporarily and can pay the higher premium for just a month or two. (Despite its convoluted enrollment process, COBRA lets you end coverage anytime.)
Another downside of switching to a Marketplace plan is that you’ll have to choose and adjust to new coverage terms and expenses like deductibles, copays, and coinsurance rates. Generally speaking, you’ll find plans with a lower monthly premium have a higher deductible (and vice versa). In other words, some plans let you pay less per month for insurance, but if you get sick, you’ll have to pay more out of pocket before they start covering your medical bills. You may also have to change your primary doctor based on your new plan’s coverage network. So, you’ll need to weigh that inconvenience against the relative simplicity of staying on your current plan through COBRA.
Join Your Spouse’s Health Plan
If you are married, your best insurance option after losing your job may be to join your spouse’s healthcare plan. Similar to the Health Insurance Marketplace, your spouse’s healthcare provider can grant you a special enrollment window and will likely cost far less per month than COBRA. Also, remember that if your spouse’s plan is available to you, you won’t qualify for the premium tax credit that might otherwise make the Marketplace your most affordable option.