Health Insurance Coverage Options After Losing Your Job

There are lots of reasons why people lose their jobs. Companies (even the big ones) can go out of business or downsize. Sometimes they are acquired by other companies and there’s a need to eliminate duplicate positions. And sometimes certain skill sets get outsourced or are no longer deemed necessary. No matter how you find yourself between employers, losing your job can be an extremely painful ordeal. The loss of income and benefits can be a scary proposition whether you’re single or have a family to support. Finding yourself in this situation can raise many questions. Some of the most common pertain to health insurance coverage. In order to make an informed decision for you and your family, it’s important to take a step back and evaluate your options. We strongly advise that you speak with your insurance broker as they are most qualified to help you with this important decision, but here are a few scenarios that we often see.

What Are My Options?

There are three main health insurance coverage options to consider after losing a job, and each of them has its individual advantages and disadvantages.

health insurance questionaire

Lose Your Health Insurance Coverage

Pros

  • There are no positive outcomes within this scenario

Cons

  • You have no health insurance coverage
  • You are liable to pay the full cost for all medical related expenses

We do not recommend continuing without health insurance coverage. Incidents requiring medical care tend to be unexpected. When uninsured, a single medical procedure can potentially push you into debt. If you do not choose a health insurance option, you will be locked out of all coverage plans until the next enrollment period. Depending on the timing, this could leave you without health insurance for up to a full year.

COBRA

Pros

  • You maintain your current group coverage and health insurance plan
  • This will not reset your deductible
  • Your current claim filing process remains unchanged

Cons

  • You are responsible to pay for your premium
  • Small administrative fee
  • Must keep your existing plan

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law enacted in 1985. It provides the ability to retain your job-based insurance coverage for an extended period of time after termination of employment. As long as you did not lose your job due to gross misconduct, you are eligible for COBRA coverage for 18 to 36 months depending on your specific scenario. COBRA is typically applicable to companies with 20 or more employees.

health insurance forms
affordable family health insurance options

Enrollment After Qualifying Life Event

Pros

  • May be eligible for subsidies
  • Ability to enroll in new coverage plan

Cons

  • Contributions generally do not carry over to new plan
  • Resets your deductible
  • Resets your max out-of-pocket

A qualifying life event is one of a set of circumstances which enable you to enroll in a health insurance coverage plan outside of the regular open enrollment period. One such circumstance is the loss of job-based health benefits. Some other examples include marriage, divorce, or a change in residency. The special enrollment period provided by successfully claiming a qualifying life event lasts 60 days. After those 60 days have passed you will be locked out until the next open enrollment period.

What Option Is Best for Me?

As previously mentioned, we strongly recommend discussing these health insurance coverage options with your agent or broker. He or she will be able to explain these options in more detail and can help you make a fiscally informed decision that is the right fit for your circumstances. Health insurance is one of the most important protections any family can have and the risk of having no coverage, even for a short period, can have devastating long-term financial repercussions should you or a dependent need medical care.

 
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