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How Long Does Health Insurance Last After Termination?

According to the U.S. Bureau of Labor Statistics, tens of millions of employees get fired or leave their jobs voluntarily every single month. In other words, if you find yourself currently in between jobs, you’re certainly not alone! While you look for new employment, understanding how to prevent gaps in healthcare coverage will help you maintain regular checkups, continue monitoring your health, and prevent unexpected worst-case-scenario emergencies from turning into long-term health and financial problems.

This page will cover the key things you need to understand regarding your employer-sponsored health insurance if you recently got fired from or quit your job, including the COBRA Act, differences between federal law and state law, stipulations for spouses and dependents, and more. 

By understanding exactly how health insurance after termination works, you can remove the stress of uncertainty from your life and ensure that you’re covered for every healthcare service you might need while you look for new employment. Once you’re at your new job, you can select the right insurance provider that prioritizes your needs to minimize hassle and ensure adequate coverage for any healthcare service you or a loved one/beneficiary might need.

This article will discuss:

  • What Happens to Your Health Insurance After You Leave Your Job?
  • Understanding COBRA
  • COBRA Plan Health Insurance Technicalities
  • Other Healthcare Options After Termination Besides COBRA
  • Transitioning From Unemployment to a New Employer’s Healthcare Plan

What Happens to Your Health Insurance After You Leave Your Job?

There are a few different ways you can end up unemployed. How you leave your job is important because it may affect your future options for health insurance coverage:

  • Quitting: voluntarily terminating your employment, with or without giving your employer notice
  • Getting fired: getting involuntarily terminated from your job on an individual basis
  • Getting laid off: getting involuntarily terminated from your job along with a group of other employees

In all three cases, your former employer has no time-based requirement for keeping you on the group health insurance plan. In some cases, employees are removed from the group health insurance plan the same day their employment ends. Other times, companies may opt to allow employees to stay on the company group health insurance plan for weeks or months after termination. Since the decision is up to the employer and varies from company to company, it’s ideal to understand the specifics before you take a job to ensure you stay on a group health insurance plan for as long as you need to.

Understanding COBRA

After your employer takes you off the company health plan, they are usually still  required to allow you to stay on the plan for up to 18 months thanks to COBRA  (Consolidated Omnibus Budget Reconciliation Act).

Specifically, the requirement for extending group coverage to a former employee through COBRA is a qualifying event. Qualifying events are any of the following:

  • The employee voluntarily initiates termination of employment (quits)
  • The employee is involuntarily terminated (fired or laid off)
  • The employee’s hours are cut so that the employee no longer works enough hours to be eligible for health benefits under the employer’s group health insurance policy. For example, if the cutoff is 40 hours per week and the employee starts working 30 hours per week instead of 50, that would be a qualifying event.

As you can see, an employer is required to extend COBRA benefits for at least 18 months in almost all cases when job loss is present. The only time when employers are not required to extend healthcare coverage through COBRA is when employees are fired because of gross misconduct. If your employer potentially disallows health insurance coverage continuation via COBRA on account of gross misconduct, the employer should have guidelines as to what constitutes gross misconduct outlined in the employee handbook. 

COBRA Plan Health Insurance Technicalities

Your employer should inform the health insurance company about your termination within 30 days of your last day of employment. From there, you should receive instructions from the health insurance company on how to continue your coverage via COBRA after your standard employer coverage ends. After receiving these instructions, you will have 60 days to sign up for COBRA benefits. After 60 days, you will lose the option to receive continuation of coverage through COBRA.

COBRA will not be identical to your previous employer health insurance

In a typical employer health insurance arrangement, the employer usually covers a portion of the employee’s health insurance premium payment. 

Although COBRA allows you to continue receiving the same employee benefits that you did while you were employed, the key difference is that when you receive health insurance through COBRA, you are required to pay the full premium. Your employer does not help out by covering a portion of it like they might have before. This requirement generally leads to COBRA health insurance being significantly more expensive than a traditional employer plan.

Special cases for COBRA continuation coverage

Similar to employer healthcare plans, COBRA healthcare plans can provide health insurance for beneficiaries other than the employee, such as the employee’s spouse and dependents. All beneficiaries get the option of COBRA coverage if the employee experiences a qualifying event (described above), or if any of the following criteria are met:

  • The employee experiences loss of life
  • The employee and their spouse get divorced or go through with legal separation
  • The employee becomes eligible for Medicare
  • In the case of a dependent child family member, if the child loses their dependent status because they get too old for the previous dependent plan

In any of the special cases outlined above, spouse and dependent beneficiaries may continue with COBRA coverage for 36 months instead of the aforementioned 18 months.

To learn more about COBRA, visit COBRA page at the U.S. Department of Labor, which includes a PDF of helpful FAQs.

Other Healthcare Options After Termination Besides COBRA

Although COBRA can be a convenient way to continue accessing a group health coverage insurance policy after a qualifying event, some states provide alternative ways of getting health insurance due to the complexities involved with enforcing COBRA. These state-specific options often allow for an individual to transition from group health insurance coverage to an individual plan. Although this type of plan is often more expensive, having the option can be helpful when there are complications with COBRA health insurance continuation. Selecting a new individual plan can also allow you to modify the healthcare services that you’re covered for. 

In many cases, state laws put a requirement on the length of employment that is necessary before COBRA alternatives are accessible to a former employee. For example, it’s common to require at least three months of employment at your previous employer if you wish to take advantage of alternative options provided by your state.

To see all of your marketplace options under the ACA (Affordable Care Act), visit Healthcare.gov. Note that qualifying events enable you to access the special enrollment period for health insurance marketplace plans and you are not required to wait for the standard ACA open enrollment period. The ACA also guarantees coverage for pre-existing conditions.

Transitioning From Unemployment to a New Employer’s Healthcare Plan

Employers are not required to offer healthcare coverage to employees on their first days of employment. Although some employers do offer immediate healthcare coverage, employers can technically wait up to 90 days (including weekdays and holidays) before offering coverage. 

Since employers are not required to offer health insurance on your very first day, it’s wise to contact the human resources department at your new job to clarify when you will be able to get onto the new employer’s group health plan. If you cancel your COBRA or other health insurance coverage too early, you may experience a lapse in coverage for weeks or months before your new employer allows you to get onto the group health plan.

Takeaway

Whether you quit, get fired, or get laid off, you almost always have the option to continue using your previous employer’s group health insurance plan under COBRA. Some states also offer alternatives to COBRA that may be worth exploring. Once you find new employment, be sure to clarify when you are able to access the new employer’s group health insurance policy to prevent lapses in coverage.

At your new job, choose from the supported health insurance options to find the best health insurance provider that prioritizes your physical health and mental well-being. By choosing a trustworthy and patient-first health insurance company, you can ensure stress-free coverage, plus guaranteed and convenient access to the doctors and specialists you and your loved ones need.

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