Keeping Health Insurance After Leaving a Job

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Contributor, Benzinga
October 26, 2022

If you decide to leave your job, you do not automatically lose your health insurance. Many employers must provide continuation insurance plans because of federal and state rules — regardless of why you leave your job. Keep reading to discover more about options for keeping health insurance after quitting your job.

How to Keep Health Insurance After Leaving a Job

You will need to find a way to continue your health insurance coverage if you have just left your work or are considering doing so. Choices available are to you. If you want to continue your health insurance coverage after leaving your job, consider the following possibilities.

1. COBRA Coverage

By enrolling in COBRA, most people keep their health insurance after losing their jobs. Any employee who is laid off or quits employment may remain on his former employer's group health insurance plan thanks to the Consolidated Omnibus Budget Reconciliation Act (COBRA). You will be eligible for COBRA coverage if your company has more than 20 employees, and you are already enrolled in the group insurance plan at the time of your termination. But expect your monthly rates to be higher if your employer contributed to the cost of your insurance while you were employed. Once you've left your job, your company will no longer contribute to your health insurance payment.

2. Negotiate Continued Insurance

Even if you quit your job, you can still keep your insurance coverage if you and your former employer agree it's in everyone's best interests. Check your severance package to see whether any options for continuing your health insurance beyond COBRA will let you keep getting coverage as if you were still working. If it doesn't, and you left your job for reasons that weren't your fault, you might be able to work something out with your former employer's human resources and legal departments.

3. Buy a Conversion Policy

After leaving your job, you may obtain a health insurance conversion policy, which will allow you to convert your group insurance policy from your employer into an individual health insurance policy. First, check with the insurance company to see whether it offers a conversion policy, as not all companies do. In some cases, you can only be approved for a conversion policy if you've exhausted your COBRA coverage (typically 18 months) or you've had no lapse in your health insurance coverage. 

4. Healthcare Marketplace Coverage

Under the Affordable Care Act, the Health Insurance Marketplace allows people to shop for their own coverage. They can use this tool to compare the prices of individual and family plans to COBRA. They can pick from different plans based on what works best for them.

Keep in mind that based on your income and the number of people who depend on you, you may be able to get premium tax credits, Children's Health Insurance Program (CHIP) coverage, or free or low-cost Medicaid through the government's Marketplace.

5. Private Health Insurance

When comparing COBRA with private health insurance, the latter may be more cost-effective in some circumstances. You can get specific policies protecting you and your loved ones from many different insurers. If you don't qualify for COBRA or do not want to keep the health insurance policy you had with your employer, you may discover that purchasing an individual policy gives you more options.

6. Short-term Health Insurance

If you don't have other health insurance but know you're going to incur some significant medical expenses, a short-term health insurance plan may be able to help. These policies are temporary, covering you for only three months. 

The benefits covered by short-term health insurance plans are not required to mirror those of comprehensive health plans. The insurer has the right to reject your application on medical grounds, such as a preexisting condition.

Because of these policies' limited scope of coverage, temporary health insurance is typically more affordable. A short-term plan may be a smart option if you need interim coverage for things like a broken bone or an unexpected illness. Be sure to take note of any exclusions or limitations outlined in the policy before signing up.

7. Medicare or Medicaid Coverage

You can also get Medicare or Medicaid if you are 65 or older when you leave your job.

Medicare is usually available to people who are 65 or older, have a disability, or have end-stage renal disease (permanent kidney failure requiring dialysis or a transplant). Part A is hospital insurance, and Part B is medical insurance (Medicare insurance). Part A is free if you are 65 or older and have worked and paid Medicare taxes for at least 10 years, either on your own or with your spouse. At age 65, you can get Part A without paying premiums if:

  • You are getting money from Social Security or the Railroad Retirement Board because you are of retirement age.
  • You can get benefits from Social Security or the railroad, but you haven't applied for them yet.
  • You or your spouse worked for the government and were covered by Medicare.

Go to the eligibility tool to determine whether you are eligible and how much your premium will be.

You might be eligible for Medicaid depending on how much money you make and where you live. Medicaid helps Americans with low incomes. People whose income is up to 138% of the federal poverty level are covered by Medicaid in 38 states that have expanded Medicaid. You can sign up for coverage through the Medicaid site for your state. Medicaid is a low-cost option with protections for consumers and low out-of-pocket payments. However, there are limits on how much money you can make, and finding a doctor who takes Medicaid may be hard.

When Your Spouse Has Health Insurance

If you're married, you might be able to sign up for the health insurance your spouse's job offers. To be eligible, you usually must have had a different plan when you rejected coverage from your spouse's plan. If not, you'll have to wait until your spouse's work has an open enrollment period. Because you're leaving your job and losing your health insurance, you should be able to join your spouse's plan during a special enrollment period.

Preparing to Find New Health Insurance

Examine your health insurance alternatives before quitting. Medical and economic situations vary. COBRA or a marketplace individual plan may be preferable for you.

Use these methods to stay covered after your employer's insurance expires.

  • Before quitting, ask your human resources representative about your employer's insurance plan and when you'll lose coverage.
  • Gather your health insurance papers to enroll. By providing a checklist, the marketplace simplifies plan applications.
  • Quit early if your firm lets you keep coverage until the end of the month. This could offer you time to get new coverage, say from a new employer, without COBRA.

Don't forget about your flexible spending account (FSA) or health savings account (HSA) if you decide to quit. Your employer receives all remaining FSA funds when you leave. COBRA may let you use your HSA. However, FSA contributions cannot be used for COBRA or commercial health insurance premiums. If you quit or switch employment, you keep your HSA and its money, but the bank may charge a small fee if your employer no longer pays for it.

Compare Health Insurance Providers

When you find yourself without an employer-provided health insurance plan, Benzinga can help you evaluate your choices. Use the following list as a starting point for finding quality, cost-effective health insurance.

Frequently Asked Questions

Is COBRA insurance required under the law?

After a qualifying occurrence, a group health plan must give COBRA continuing coverage to qualified individuals for a qualifying event. Eligible beneficiaries are employees with group health coverage the day before a qualifying event. Termination for any cause other than gross misconduct or a reduction in hours is a qualifying event.

How long do you keep insurance after quitting a job?

Most employer-provided health insurance plans expire either on the day you stop working or at the end of the month you cease working; however, neither of these dates is mandated by law. Therefore, when you quit or are let go from your job, your employer-provided health insurance will expire according to the company’s policy.

About Janet Hunt, Insurance Agent

Janet has been working in, and writing about, the insurance industry for over 20 years.