Figuring out health insurance after leaving a job can be frustrating and confusing, but you can make the transition from your old coverage as smooth as possible by being prepared. Learn when your health coverage ends and what options you have after it expires.
When Does Health Insurance Expire After Leaving a Job?
Although there are no set requirements, most employer-sponsored health insurance ends on the day you stop working or at the end of the month in which you work your last day. Employers set the guidelines for when employer-sponsored health coverage ends when you resign or are terminated. Talk with your human resources department to figure out your employer’s policies. You might also be able to find details on health insurance expiration in your benefits documentation. Suppose you plan to leave your job on May 1. You talk with your human resources representative, and they explain that your company terminates health insurance at the end of the month of the employee’s last day. This means that your last day of coverage could be May 31 if you don’t take action. You would no longer be covered on June 1.
Health Insurance Options After Leaving a Job
The good news is that most people have access to several options to get health insurance after leaving a job, even if they don’t have access to another employer-sponsored plan.
The Consolidated Omnibus Budget Reconciliation Act (COBRA)
The Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, is a law that allows you and certain family members to stay on your current group health insurance plan in certain circumstances. COBRA coverage is temporary coverage that can be used to provide continued health insurance for you, your spouse, former spouses, and your dependent children. Most employers with 20 or more employees are required to provide a COBRA option, except for certain religious organizations and the federal government. Additionally, some states have COBRA requirements for employers with fewer than 20 employees. A COBRA plan usually provides coverage for up to 18 months, but you’ll have to cover the full cost of the premiums plus an administrative fee yourself. This can make COBRA plans expensive, especially if you don’t have an income. Although COBRA can be expensive, reasons you might consider it after leaving your job include:
You already have a new job and only need coverage for a month or two until your new benefits kick in. You’ve met your deductible on your current health plan for the year.
The Health Insurance Marketplace
A popular alternative to COBRA coverage is to purchase an individual or family health insurance plan through the health insurance marketplace. Leaving your job and losing your employer’s health coverage qualifies you for a special enrollment period through the marketplace. Coverage can start as soon as the first day of the month after you lose your coverage. You can search and apply for health plans online. Your application will show you if you qualify for savings on premiums or medical costs based on your income, including whether you’re eligible for Medicaid. A marketplace plan could be an affordable way to get health coverage between jobs. You can cancel a marketplace plan without penalties if you start getting benefits from a new job.
Join Your Spouse’s Plan
You may be able to enroll in your spouse’s employer-sponsored health insurance if you’re married. You typically must have been covered by a different plan when you initially declined coverage from your spouse’s plan to be eligible or you’ll have to wait until your spouse’s open enrollment period at work. Say you already had your current job when you and your spouse got married. You both had health insurance through work, so you declined to join each other’s plans. You should be able to enroll in your spouse’s plan under a special enrollment period now that you’re leaving your job and losing your health insurance.
Short-Term Health Insurance
Short-term health insurance plans are temporary coverage designed to help you pay for catastrophic events when you don’t have other coverage. These plans are different from group coverage or individual plans, and they can only cover you for up to three months. The lack of comprehensive coverage from short-term plans means they’re generally less expensive than other types of health insurance. A short-term plan could be a good option if you need temporary protection from catastrophic events, such as broken bones or a sudden illness. Be sure to carefully read the policy before joining and note any restrictions or exclusions.
How To Prepare To Leave a Job
Review all your options for health insurance before quitting your job. Everyone’s medical and financial situations are different. You might benefit from continuing coverage through COBRA, or it might make more sense to join an individual plan through the marketplace. Use these tips to make sure you’re covered when your employer-sponsored insurance expires:
Talk with your HR representative before you resign to learn how your employer’s insurance plan works and when you’ll lose coverage. Consider quitting earlier in the month if your company lets you keep coverage until the last day of the month. This could give you the time you need to get new coverage, such as from a new employer, without having to pay for COBRA. Gather any documents you’ll need to enroll in your new health insurance plan. The marketplace offers a convenient checklist to help you apply for a plan.
