What Happens If You Lose Your Job Based Health Insurance?
Losing your job or your employer sponsored health insurance can be stressful, but it does not necessarily mean you have to remain uninsured.
Shanti
9/18/20263 min read
What Happens If You Lose Your Job Based Health Insurance?
What Happens If You Lose Your Job Based Health Insurance?
Losing your job or your employer sponsored health insurance can be stressful, but it does not necessarily mean you have to remain uninsured.
If your health coverage was provided through your employer and you lose that coverage, you generally have two main options: enrolling in a Marketplace health insurance plan or continuing your previous coverage through COBRA.
Option 1: Enroll in a Marketplace Health Plan
If you leave your job and lose your employer sponsored health insurance, you may qualify for a Special Enrollment Period, or SEP.
The reason you left your job does not necessarily matter. Whether you resigned, were laid off, or were terminated, losing your employer sponsored health coverage may allow you to enroll in a Marketplace plan outside the annual Open Enrollment Period.
Generally, you have 60 days after losing your job based health coverage to enroll through a Special Enrollment Period.
Your new Marketplace coverage may begin on the first day of the month following the end of your employer sponsored coverage.
Could You Qualify for Financial Assistance?
Yes. When you apply for Marketplace coverage, your household income and other eligibility factors are used to determine whether you qualify for financial assistance such as a Premium Tax Credit to help reduce your monthly premium.
Depending on your circumstances, you or members of your household may also qualify for programs such as Medicaid or CHIP.
Marketplace financial assistance is generally based on your estimated total household income for the entire calendar year. This means income you earned earlier in the year before leaving your job should also be included when estimating your annual household income.
Option 2: Continue Your Coverage Through COBRA
In some situations, you may have the option to continue the same employer sponsored health insurance through COBRA.
COBRA can allow you to keep your existing health coverage for a limited period of time, often up to 18 months.
However, there is an important difference. Once your employment ends, you may be responsible for paying the full cost of the health insurance premium, and a small administrative fee may also apply.
Because COBRA can be expensive, it may be helpful to compare its cost and benefits with the health insurance options available through the Marketplace before making a decision.
What If Your New Job Offers Insurance, but There Is a Waiting Period?
Suppose you start a new job, but your new employer sponsored health insurance will not begin for another month or two.
You may be able to enroll in a Marketplace health plan during that gap. Depending on your income and eligibility, you may also qualify for financial assistance during this period.
Once your new employer sponsored coverage begins, you can end your Marketplace coverage.
What If You Can Join Your Spouse’s Health Insurance?
You may still choose to purchase a Marketplace plan, but your eligibility for financial assistance may be affected.
If the health insurance offered through your spouse’s employer meets Marketplace requirements for affordability and coverage, you may not qualify for a Premium Tax Credit or other Marketplace financial assistance, even if you decide not to enroll in your spouse’s plan.
Will You Need Proof That You Lost Your Coverage? Possibly.
After submitting your Marketplace application, you may be asked to provide documentation showing that your employer sponsored health coverage ended.
It is important to submit any requested documents promptly so your enrollment is not delayed.
Timing Matters
Marketplace coverage generally does not begin on the exact day your employer sponsored insurance ends.
For example, if your employer sponsored coverage ends on March 7 and you select a Marketplace plan by March 31, your new Marketplace coverage may begin on April 1.
Planning ahead can help reduce the possibility of having a gap in health insurance coverage.
Marketplace or COBRA: Which One Should You Choose?
There is no single answer that works for everyone.
Your monthly premium, household income, preferred doctors and hospitals, prescription medications, deductible, provider network, and the amount of time before your next insurance coverage begins can all affect your decision.
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