What happens with your health insurance when you get laid off?
Okay so you got laid off. Now what? There’s a whole list of things to take care of but let’s start with health insurance first. Because, well, it’s more time-sensitive than you might realize.
What happens with your health insurance when you get laid off?
Basically, the moment your employer coverage ends, you become uninsured. That means you will have to pay out of pocket for any medical expenses that might arise. This is probably the worst case scenario so let’s walk through a preferable action plan for you ⬇️
1️⃣ CLARIFY YOUR EXACT HEALTH INSURANCE CUTOFF DATE
The actual date when your company-sponsored health insurance ends can vary. But most companies will either cut off your health insurance on your last day of work or at the end of the month.
So if you get laid off on November 3, your cutoff date could be:
- November 30 = last day of the month
- November 17 = your last day of working (counting a typical 2-weeks notice when you’re technically still working)
- a random different date = I wish this weren’t true but it could literally just be a random date so make sure to confirm this with your HR!
2️⃣ YOU HAVE 60 DAYS TO MAKE A DECISION
From the day that your coverage ends, you have 60 days to make a decision on your health insurance.
First some terminology clarification:
- COBRA (Consolidated Omnibus Budget Reconciliation Act) = you get to keep the same health insurance that you had with your employer but now you have to cover the whole cost yourself. Most times the jump in cost is quite huge and might not be an option financially.
- ACA (Affordable Care Act) = losing your job triggers a special enrollment period, meaning you can shop for plans on healthcare.gov (or your state marketplace). Depending on your new updated income, you might qualify for subsidies making these plans drastically more affordable.
Ok so here are your options.
- If you choose COBRA,
You get to “wait it out” for up to 59 days. So let’s say you believe you could get a new job fast, you could go for COBRA and sign up for it on the last day right before the 60-day time window ends because COBRA coverage backdates to the day your employer insurance ended.
Here’s an example:
- If you choose ACA
You get to shop on your state’s health insurance marketplace & possibly find a pretty low-cost health insurance plan now that your income is drastically lower (or 0). However, you have to do this within 60 days.
The ACA marketplace insurance won’t cover anything retroactively so if this is your preferred choice, you should move fast. But note that ACA health insurance doesn’t kick in immediately:
- If you sign up before the 15th, your coverage will start on the 1st of the next month.
- If you sign up on/after the 16th, your coverage will start the 1st of the following month. So you might end up with a window of 45 days of being uninsured.
3️⃣ WHAT HAPPENS IF YOU MISS THE 60 DAY WINDOW?
Here’s where it gets really shitty. If you miss the 60-day window, you’re kinda screwed…
You’re no longer eligible for COBRA. And you can’t enroll in ACA until the next open enrollment period which happens once a year between November 1 - January 15.
In our hypothetical example, my 60 day window ends on February 1. That means that on February 2, I no longer qualify for COBRA & I will only have access to ACA marketplace in 9 months on November 1.
Your only solution then? Get a new job that has health insurance ASAP. But remember to check again with your new employer’s HR because your health insurance might kick in either on your first day, or the first of the month, or the first of the second month. Yeah, not great…
