Have Just Lost Your Job-Based Health Insurance: Here’s What You Should Do

September 27, 2023

One of the most burning topics in the United States, health insurance covers about 300 million Americans, over 90% of the population. Half the people go with private health insurance plans – also known as employer- or job-based health insurance plans – whereas the rest are covered either by Medicare or Medicaid.

At the same time, about 10% of people remain uninsured, including those who lost their job-based health insurance – either because they quit their jobs or were fired – and were never able to restore it or switch to a new insurance plan.

And even though we sincerely believe you’re not one of them, it would be beneficial to learn the insurance alternatives you will have if you decide to quit your job or are laid off or fired.

Getting ahead of ourselves, here are the alternatives:

  • ACA market insurance
  • Catastrophic insurance
  • Short-term insurance

Let’s take a closer look at each of the mentioned.

COBRA: Leaving Your Job While Holding on to Your Health Insurance

Very few things are as daunting and discouraging as hearing “you’re fired” from your boss or human resources representative. Still, the good news is you can prolong your coverage for up to 18 months after you’re done with your job, an opportunity provided by COBRA.

Suppose you’re working with a company with over 20 workers. Then, according to the COBRA Act, your employer must prolong your insurance coverage – the so-called ‘continuation coverage’ – for up to a year and a half after your position has ended. What’s more, not only does COBRA cover you, but it also covers your dependents – your spouse, children, etc.

The Nuances To Know About Cobra Insurance

COBRA is a savior for millions of people, but it’s not always as rosy as it seems. There are three main things you have to pay attention to before applying for COBRA insurance:

  • Eligibility. Only some people can apply. There are four main reasons to become eligible for COBRA insurance: job loss, loss of work hours, divorce, and death.
  • Timeline. There’s a 60-day window to apply for a COBRA insurance package, starting when your current insurance ends. You can wait to apply, though: you have two months, which you can still use to weigh all the pros and cons of COBRA and other available insurance packages.
  • Costs. Contrary to popular misconception, the premiums with COBRA are always higher than those with employer-based insurance since you have to pay the total premium on your own. Your employer won’t cover a portion of premiums with COBRA, as with employer-based insurance. Besides, you will have to pay an administrative fee of 2%.

COBRA is a decent short-term insurance option, but it must become something other than your full-fledged long-term insurance plan since it only lasts 18 months. Naturally, you will have to find a more suitable health insurance plan during that time.

ACA Insurance Market: Arguably the Best Health Insurance Between Jobs

Like many others, you need to know that you cannot get insured anytime you want. For that, there’s a particular open period allocated for applying for health insurance or changing your plan – and if you haven’t applied on time, you have to wait until the next window opens. The good news, though, is that losing a job qualifies you to select a new plan for two months.

If you cannot find a competitive employer-based insurance plan as an alternative to COBRA, you can buy your new plan at an ACA marketplace

You can find four tiers of ACA insurance plans on an exchange – bronze, silver, gold, and platinum – each offering different conditions, levels of premium, and out-of-pocket costs. 

A deductible for a bronze plan can reach a few thousand dollars; for silver – between $1000 and $1000; for gold – a few hundred dollars; for platinum – only a few dozen dollars. At the same time, as a rule, the higher the out-of-pocket costs, the lower the monthly premium.

  • All ACA insurance plans include ten essential healthcare services – hospitalization, prescription drugs, outpatient services, laboratory services, wellness & preventive services, emergency services, pediatric services, rehabilitative services, mental & behavioral health, and maternity care – but states may expand this essential coverage. On the flip side, it depends on the insurance company to what extent it covers each of the mentioned healthcare services, which is why you have to pay attention to the plan’s details, including copayment and deductible.

Also, you are eligible for ACA subsidies if your net income is between 100% and 400% of the Federal Poverty Level (FLP). The subsidies will help you pay your monthly premiums and protect you from any increase in premiums (more often than not, the subsidies increase proportionally to the rise in premiums). In 2020, about 87% of the ACA health insurance owners were also subsidized.

The Nuances To Know About ACA Insurance

  • Eligibility. You can apply for an ACA insurance plan regardless of whether you quit your job or were fired. However, you can only qualify for a particular enrollment period if you had employer-based insurance in your previous job.
  • Timeline. You have a separate enrollment window of two months (60 days) to choose a new insurance plan on the ACA markets. More often than not, you have to apply for an ACA insurance plan before the 15th of the current month if you want the plan to start working on the 1st of the following month.
  • Costs. Depending on your budget, you can choose between four tiers of ACA insurance. Make sure to get an ACA subsidy if you are eligible – it will cover some part of the premium.

Medicaid: One of the Best Options for Low-income Families

Amounting to 16% of U.S. healthcare spending, Medicaid is a governmental-based health insurance program that provides healthcare coverage to over 75 million people. The main advantage is that you can apply at any time with no enrollment deadlines and get coverage for various healthcare needs. They typically include but are not limited to doctor visits, inpatient care, pediatric series, family planning, laboratory works, x-rays, and more.

Note, however, that Medicaid may not be entirely free. Sometimes, you may be asked for a copayment or a payment for other health-related expenses. But then again, it all depends on your location, income, age, and many other factors.

Catastrophic Insurance: Big-Time Emergency Coverage

Catastrophic insurance can hardly be considered your primary insurance for many reasons, but it can protect you against the worst. Even though all catastrophic plans also cover the same ten health benefits that ACA insurance covers, a high deductible means that you will likely have to pay for most of your healthcare problems out of pocket. 

As for significant issues like a prolonged illness or severe injury, this type of insurance will cover that (after you pay the deductible) and three primary care visits a year.

Important: You can only be eligible for catastrophic coverage if you are under 30 or have a ‘hardship exception’ (the inability to afford insurance due to financial or other circumstances).

Short-term Health Insurance: Up to 12 Months of Coverage

Last but not least, you can opt for short-term individual health insurance, which typically offers up to 12 months of health coverage, which can then be prolonged in some states. You can get this type of coverage anytime you want. Still, it typically provides fewer benefits than ACA coverage since the latter has mandatory benefits, whereas the former doesn’t have such. Pre-existing conditions won’t be covered either, nor will you receive subsidies.

As the name suggests, short-term health insurance is about getting short-term shelter from adversities, and under no circumstances should you rely on this type of insurance as your long-run coverage.

Frequently Asked Questions

If I quit my job now, when will my job-based insurance expire?

According to the COBRA, you can prolong your job-based healthcare insurance for up to 18 months from the time you quit your job. However, your employer will no longer cover a portion of your premium – you will have to pay the total premium and an administrative fee of approximately 2% out of your pocket.

Can I keep health insurance for longer than 18 months?

The only option to keep your insurance after quitting your job is to prolong it up to 18 months, as per COBRA. There’s no option to keep your job-based health insurance for longer.

What should I do if my new job has a waiting period before job-based insurance starts?

You can buy any other available insurance – for example, one of the ACA marketplace plans or short-term insurance – to get the temporary coverage you need.

Will I be asked for proof that I am not insured?

You may be asked to provide proof that you are not insured depending on the type of insurance you apply for (for example, the ACA Marketplace may ask for the proof).

Can I still be covered if I don’t pay?

A grace period indicates how much time you are covered by your insurance, even if you have yet to pay the premium on time. A typical grace period for health insurance is 90 days, but it can be shorter or longer depending on many factors.

Will there be a grace period if I receive health insurance from my employer shortly before leaving the job?

The grace period for this case should be two months unless specific circumstances exist.

What if my new employer doesn’t offer health insurance?

In this case, you will have to choose your health insurance independently. Depending on your needs, income level, and other factors, you may be eligible for one of the insurance mentioned in this article. Scroll above to learn more.

Have Just Lost Your Job-Based Health Insurance: Here’s What You Should Do 1

Oleksandr Rohovnin is a Content Marketer at Phonexa.com and an expert contributor to CoverExplore. His passion is digital marketing, innovative technologies, tech industries, and – above all – distilling vast amounts of complex information into engrossing narratives anyone can relate to. At CoverExplore, Oleksandr stokes passion for auto insurance and the automotive industry in general in every story he curates.