Lost Health Insurance Coverage from Your Employer?

Posted Jan 5, 2025

What to Do If You Lose Health Insurance Coverage from Your Employer

Losing employer-sponsored health insurance can be a stressful and confusing experience, but it doesn’t mean you're without options. Whether you’ve been laid off, quit your job, retired, or faced any other change that caused you to lose your coverage, it’s essential to understand your rights and the healthcare options available to you. In the U.S., there are various ways to obtain health insurance after losing employer coverage, including through the government, private insurance, or even through your spouse’s plan.

This article will guide you through the next steps if you've lost your employer health insurance, ensuring you maintain health coverage without unnecessary gaps or penalties.

1. Understand Your Rights Under COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows you to continue your employer-sponsored health insurance for a limited period of time after losing coverage. COBRA applies to employers with 20 or more employees and provides an important safety net if you lose your job or experience a reduction in work hours.

What is COBRA?

• COBRA allows you to keep your existing health insurance plan, but you’ll have to pay the full premium, which can be expensive. Under COBRA, you can continue your current health plan for 18 months after a job loss or reduction in hours, though certain circumstances (like disability or death) can extend the coverage period up to 36 months.
• The law gives you 60 days to decide whether you want to elect COBRA coverage after losing your job or employer health benefits. During this time, you can explore other options without risking a gap in coverage.

How Much Does COBRA Cost?

• Typically, you’ll pay the entire premium—both your contribution and the portion your employer used to cover. This means your monthly premiums could be much higher than when your employer was subsidizing the costs.
• There may also be an additional administrative fee of up to 2% added to the premium cost.

Why Consider COBRA?

• Familiar Plan: COBRA allows you to keep the same health plan you had through your employer, which can make it easier to manage your care and continue seeing the same doctors or using the same medications.
• Short-Term Solution: If you expect to find new employment or health insurance coverage soon, COBRA can be a short-term solution to prevent gaps in coverage.

Things to Keep in Mind:

• While COBRA coverage is an option, it can be quite costly, especially if your employer provided a substantial portion of your premium. It's a good option if you need to maintain continuity of care or need more time to transition to other coverage options.

2. Explore the Health Insurance Marketplace (ACA Plans)

The Health Insurance Marketplace, established by the Affordable Care Act (ACA), offers an alternative to COBRA for individuals who have lost employer-sponsored health coverage. The Marketplace provides subsidized plans for those who qualify based on income, and it may offer more affordable options than COBRA.

Qualifying for Special Enrollment

• Losing your job-based health coverage triggers a Special Enrollment Period (SEP), which allows you to sign up for an ACA plan outside of the standard open enrollment period.
• You typically have a 60-day window after losing coverage to apply for a Marketplace plan. This gives you a limited but crucial timeframe to evaluate and select a plan that suits your healthcare needs and budget.

Subsidies and Cost Assistance

• Depending on your income, you may qualify for premium subsidies (also known as advance premium tax credits) that reduce your monthly premium.
• If your income is low enough, you may also be eligible for cost-sharing reductions, which can lower your out-of-pocket costs (deductibles, copayments, etc.) for care.

How to Use the Marketplace:

• Go to HealthCare.gov or your state’s Marketplace website to review your options.
• Compare available plans based on coverage, monthly premiums, deductibles, and prescription drug formularies to choose a plan that meets your needs.

Advantages of Marketplace Plans:

• Affordable Options: If you qualify for subsidies, ACA plans can often be much cheaper than COBRA, especially for those who are between jobs or have a lower income.
• No Health Questions: ACA plans cannot deny coverage based on pre-existing conditions, so this can be a good option for individuals with health concerns.

Things to Keep in Mind:

• If you are eligible for COBRA, you may still want to consider the Marketplace to see if the plans are more affordable. You have 60 days from the date you lose your job-based coverage to choose the Marketplace over COBRA.

3. Look Into Medicaid for Low-Income Individuals

If your income is low enough, you may qualify for Medicaid, a joint federal and state program that provides health coverage for low-income individuals and families. Medicaid eligibility and coverage vary by state, so the rules depend on where you live.

Eligibility for Medicaid:

• Medicaid is generally available to individuals with incomes up to 138% of the federal poverty level, though some states have expanded Medicaid eligibility.
• Pregnant women, children, elderly individuals, and those with disabilities may also qualify for Medicaid at higher income levels, depending on their state.

How to Apply for Medicaid:

• You can apply for Medicaid through your state’s Medicaid program, either online, by phone, or in person at your local Medicaid office. Each state has its own rules about enrollment and eligibility.

Why Consider Medicaid:

• Low to No Cost: Medicaid typically offers low or no-cost health insurance, with minimal out-of-pocket costs.
• Comprehensive Coverage: Medicaid covers a wide range of healthcare services, including doctor visits, prescriptions, hospital care, and preventive services.

4. Look Into Spouse’s or Parent’s Health Plan

If you are married or have children, one of the quickest ways to regain health coverage is through your spouse’s or parent’s employer health insurance plan.

Eligibility for Coverage:

• Spouse’s Plan: If you lost your job-based coverage, you may be eligible to join your spouse’s employer-sponsored health plan. This is considered a qualifying life event that triggers a Special Enrollment Period for spouse coverage.
• Parent’s Plan: If you are under 26, you can join a parent’s health insurance plan, regardless of your marital status or whether you live with your parents.

How to Enroll:

• Contact your spouse’s or parent’s employer’s benefits administrator to find out how to add you to their plan. You will likely need to do this within 30 days of losing your coverage.

Why Consider a Spouse’s or Parent’s Plan:

• Affordable Coverage: If your spouse or parent has access to an employer plan with good coverage, it can be a cost-effective and reliable way to maintain health insurance without having to pay high premiums on your own.
• No Enrollment Gaps: As long as you enroll promptly, there’s no risk of a gap in coverage.

5. Consider Short-Term Health Insurance

If you are between jobs or experiencing a temporary gap in coverage, you might consider a short-term health insurance plan as a stopgap. These plans typically provide limited coverage for emergencies, doctor visits, and hospital stays but do not cover prescription drugs or pre-existing conditions.

Why Consider Short-Term Plans:

• Quick Coverage: Short-term plans can be a fast and easy way to secure basic coverage.
• Lower Premiums: They often have lower premiums than traditional health plans, though they come with fewer benefits and more limited coverage.

Things to Keep in Mind:

• Limited Coverage: Short-term plans generally don’t cover essential health benefits like maternity care, mental health services, or prescriptions, and they don’t cover pre-existing conditions.
• Temporary: These plans are only meant for short-term coverage, typically ranging from a few months to a year.

Conclusion

Losing your employer-sponsored health insurance can feel overwhelming, but it’s important to know that you have several options for continuing your health coverage. Whether you opt for COBRA, a plan from the Health Insurance Marketplace, Medicaid, or a spouse’s plan, there are solutions that can keep you covered without large gaps in your healthcare.

Take action quickly—whether that’s enrolling in COBRA, checking out the Marketplace, or qualifying for Medicaid—so that you don’t face unnecessary penalties or experience a lapse in coverage. By reviewing all your options and making an informed decision, you can find a solution that best fits your healthcare needs and budget during this transition.

Contact us today and let's go over your health insurance options.