Lost Your Job? Here’s How to Maintain Your Health Insurance or Find New Coverage

  • If you have lost your job and your employer-sponsored health insurance (ESI), you will be eligible for a specific enrollment period.
  • If you lose your job, then you may have 60 days in which to decide whether to use COBRA for quick protection.
  • When deciding whether to enroll in COBRA or the market, consider elements such as ACA subsidies and money already spent.
  • You may be eligible for medical premium subsidies based on your income.
  • If you are nearing Medicare eligibility, sponsored market medical insurance can keep you covered.

The majority of people under 65 years old get their health insurance through an employer. If you have a stable job with good health benefits, it’s easy to enroll.

The downside of having your medical insurance tied to your employment is that losing your job could also mean you lose your medical insurance. This adds stress to a situation which was already stressful.

You have options. Depending on your circumstances, you may even have a few. We’ll examine what you need to know about medical insurance if you have lost your job and no longer have your employer’s health coverage.

When can I purchase my own insurance policy after I lose my job?

If you have lost your employer-sponsored medical insurance plan, you do not need to wait until the next annual open enrollment period to enroll in a new ACA-compliant health plan. Due to the absence of an employer-sponsored health plan, you’ll be eligible for your own personal enrollment period.

This can permit you to enroll in a plan via the marketplace/alternate and reap the benefits of the subsidies which can be greater than ever, because of the American Rescue Plan.

If you enroll before your coverage ends, your new policy will begin the first of the following month. This means you’ll be covered even if your old plan expires on the last day of the previous month.

You can also enroll in a new plan 60 days after you have lost your coverage. However, your old plan will not take effect retroactively if you wait to enroll.

If you find yourself in this situation, you may discover that a short-term health plan can be a good option to bridge the gap until your new plan comes into effect. Short-term plans won’t cover pre-existing conditions and are not regulated under the Affordable Care Act (ACA). They’ll provide good coverage for unexpected medical needs during a short window when you would otherwise be uninsured.

COBRA (or state continuation) versus self-purchased protection

If COBRA is available, you may have up to 60 days to decide whether you want to use it. This window can be used as a buffer between your old coverage and your new one, because COBRA will take effect retroactively when you choose to use it. If you have medical needs during the month between your old plan and your new one, you can elect COBRA. If you have paid all COBRA premiums due, the protection will begin seamlessly when your old plan ends.

Your employer will inform you if COBRA is available. They’ll tell you what to do to activate it, how long you can keep it in force, and how much you need to pay each month to keep the protection active.

If you rely on COBRA to continue your health insurance after you leave work (instead of switching to a plan you purchase yourself), you will have a specific enrollment period when the COBRA subsidy expires. You can then switch to a family/individual plan if you want to.

COBRA protection vs. individual market medical insurance

Here’s some things to keep in mind when deciding whether or not you want a COBRA plan, or if you prefer a health insurance policy on the individual market:

  • ACA market subsidies can be obtained in all income ranges depending on the cost of coverage in your area (the American Rescue Plan eliminated the cap on revenue for subsidy eligibility in 2021 and 2022). The subsidies are significant, covering the majority of premium costs for most market enrollees. You’ll find that the monthly premiums will be lower if you enroll in an employer-sponsored COBRA plan, as opposed to enrolling in a plan through the market.
  • You may have already paid a lot of money in out-of pocket expenses under your employer sponsored plan during the past year. Even if the same insurer provides your employer-sponsored coverage, you’ll almost certainly start at zero if you switch to a personal/family plan. According to your situation, the money you have already spent on out-of pocket medical expenses this year may offset any premium reductions that you are likely to see in the market.
  • You may have a particular doctor or medical facility you need to continue to use. Check the provider networks of all the available individual/family plans to determine if they are in-network. (The supplier networks may differ significantly between employer-sponsored plans and the private market, even if the plans are offered by the same insurance company. If you have a particular drug that you need, make sure it’s on the formularies for the plans you are considering.
  • If you switch to a household/individual plan, will you be eligible for a subsidy? If you qualify for a premium subsidy, you will need to purchase through your local market or exchange, since subsidies are not available if you buy your plan directly from the insurance company. You can contact a broker who will help you enroll in an alternate plan by calling the number at the top of this page. The ARP has made subsidies more accessible and larger than usual. This will continue to be true all the way through 2022.

What if I don’t have enough income to qualify for subsidies?

To qualify for premium subsidies, you must not be eligible to receive Medicaid, premium-free Medicare Part A, or employer-sponsored plans, and your income must not be less than 100 percent of the federal poverty level.

In most states, Medicaid coverage is extended to adults whose family income reaches 138% of poverty level. Eligibility is determined based on current monthly earnings. If your income has suddenly dropped to zero dollars, you will probably be eligible for Medicaid. You’ll transition to Medicaid once your job-based coverage ends.

Unfortunately, 11 states still have a coverage gap for most adults if the family income is below the federal poverty level. These people are not eligible for Medicaid or for any premium subsidies in the market. These 11 states created a bad situation for their low-income residents. There are ways to avoid the protection gap if you live in one of these states.

Understand that your family’s income for the whole year will determine your eligibility for subsidies in the market, even if your currentmonthly revenue is below the poverty level. If you have earned enough earlier in the year to qualify for subsidies, you can enroll in a policy with subsidies based on this income, even if you don’t earn any money the rest of the year.

What happens if I am eligible for Medicare soon?

In recent years, the number of people retiring in their early or late 60s before they are eligible for Medicare has increased. In 2014, the ACA introduced premium subsidies and eliminated medical underwriting. This made it a more realistic choice.

The ARP has increased subsidies and made them more widely available until the end of 2022. This makes affordable protection more accessible to early retirees. This is especially true for those whose incomes before retirement may have made them ineligible to receive subsidies the year they retired due to the “subsidy-cliff” (which the ARP has eliminated by the end of 2022).

If you are losing your job, or deciding to leave it, and you still have a few months to go before you reach 65 and become eligible for Medicare coverage, you won’t be left without insurance.

You will be able to enroll in an individual market plan during your specific enrollment period triggered by your lack of employer-sponsored coverage. Even if you had a good income in the first half of the year, you may still qualify for subsidies that will offset some of the cost of your new plan.

Market plans are always purchased on a monthly basis, so you can cancel your coverage when you transition to Medicare.

Don’t fear, get lined

What’s the short story? Even if you have had your employer’s health plan all your life, it’s not as hard to get your own individual health insurance.

If you are losing your employer-based health insurance, you can enroll outside of the open enrollment period. There’s a good chance you will qualify for financial assistance that could make your new plan affordable.

By selecting your state from the map, you can learn more about the insurance market in your area and the available plan options. There are also free enrollment assistants – Navigators, and agents – available all over the country to help you understand it all.