One of the most burning topics in the United States, health insurance covers about 300 million Americans, which is over 90% of the population. Half the people go with private health insurance plans – also known as employer-based plans, or job-based health insurance plans – whereas the rest are covered either by Medicare or Medicaid.
At the same time, about 10% of people remain uninsured, including those who lost their job-based health insurance – either because they quit their jobs or because they were fired – and were never able to restore it or switch to a new insurance plan.
And even though we sincerely believe you’re not one of them, it would be extremely helpful for you to learn the insurance alternatives you will have in case you decide to quit your job or are laid off or fired.
Getting ahead of ourselves, here are the alternatives:
And let’s elaborate on each of the mentioned.
Very few things are as daunting and discouraging as hearing “you’re fired” from your boss or human resources representative, but the good news is, you can prolong your coverage for up to 18 months after you’re done with your job, an opportunity provided by COBRA.
If you’re working with a company that has over 20 workers, then, according to the COBRA Act, your employer is obliged to offer you a prolongation of your insurance coverage – the so-called ‘continuation coverage’ – for up to a year and a half after your position has ended. What’s more, not only does COBRA cover you, but it also covers your dependents – your spouse, children, etc.
COBRA is a savior for millions of people, but it’s not always as rosy as it seems. There are three main things you have to pay attention to before applying for COBRA insurance:
All in all, COBRA is a decent short-term insurance option, but it cannot become your full-fledged long-term insurance plan since it only lasts 18 months. It goes without saying that you will have to find a more suitable health insurance plan during that time.
Just like many other people, you might not be aware of the fact that you cannot get insured just like that at any time you want. For that, there’s a special open period allocated for applying for health insurance or changing your plan – and if you haven’t applied on time, you have to wait until the next window opens. The good news, though, is that losing a job qualifies you for selecting a new plan during a special period of two months.
If you are unable to find a competitive employer-based insurance plan, as an alternative to COBRA, you can buy your new plan at an ACA marketplace. There are four tiers of ACA insurance plans you can find on an exchange – bronze, silver, gold, and platinum – each offering different conditions, levels of premium, and out-of-pocket costs. A deductible for a bronze plan can reach a few thousand dollars, for silver – between $1000 and $1000, for gold – a few hundred dollars, for platinum – only a few dozen dollars. At the same time, as a rule, the higher the out-of-pocket costs, the lower the monthly premium.
Also, if your net income is between 100% and 400% of the Federal Poverty Level (FLP), you are eligible for ACA subsidies. The subsidies will help you pay your monthly premiums and protect you from any increase in premiums (more often than not, the subsidies increase proportionally to the increase in premiums). In 2020, about 87% of the ACA health insurance owners were also subsidized.
Amounting to 16% of the total U.S. healthcare spending, Medicaid is a governmental-based health insurance program that provides healthcare coverage to over 75 million people. The main advantage is that you can apply at any time – there are no enrollment deadlines – and get coverage for a variety of healthcare needs, including but not limited to doctor visits, inpatient care, pediatric series, family planning, laboratory works, x-rays, and more.
Note, however, that Medicaid may not be entirely free. In some cases, you may be asked for a co-payment or a payment for other health-related expenses. But then again, it all depends on your location, income, age, and many other factors.
Catastrophic insurance can hardly be considered as your main insurance for many reasons, but it can protect you against the worst. Even though all catastrophic plans also cover the same 10 health benefits that ACA insurance plans cover, a high deductible means that you will likely have to pay for most of your healthcare problems out of your pocket. As for the major issues like a prolonged illness or serious injury, this type of insurance will cover that (after you pay the deductible) – as well as it will cover three primary care visits a year.
Important: You can only be eligible for catastrophic coverage if you are under 30 or have a ‘hardship exception’ (the inability to afford insurance due to financial or other circumstances).
Last but not least, you can opt for short-term individual health insurance, which typically offers up to 12 months of health coverage, which then can be prolonged in some states. You can get this type of coverage anytime you want, but it typically provides fewer benefits than ACA coverage since the latter has mandatory benefits whereas the former doesn’t have such. Pre-existing conditions won’t be covered as well, nor will you receive any subsidies.
As the name suggests, short-term health insurance is about getting a short-term shelter from adversities, and under no circumstances should you rely on this type of insurance as your long-run coverage.
According to the COBRA, you have the right to prolong your job-based healthcare insurance for up to 18 months from the time you quit your job. However, your employer will no longer cover a portion of your premium – you will have to pay the full premium and an administrative fee of approximately 2% out of your pocket.
The only option to keep your insurance after quitting your job is to prolong it up to 18 months as per COBRA. There’s no option to keep your job-based health insurance for a longer period.
What Should I Do If My New Job Has a Waiting Period Before Job-Based Insurance Starts?
You can buy any other available insurance – for example, one of the ACA marketplace plans or short-term insurance – to get the temporary coverage you need.
You may be asked to provide proof that you are not insured depending on the type of insurance you’ll apply for (for example, the ACA Marketplace may ask for the proof).
A grace period indicates how much time you are covered by your insurance even if you haven’t paid the premium on time. A typical grace period for health insurance is 90 days, but it can be shorter or longer depending on many factors.
Will There Be a Grace Period If I Received Health Insurance from My Employer Shortly Before Leaving the Job?
The grace period for this case should be two months unless there are specific circumstances in place.
In this case, you will have to choose your health insurance independently. Depending on your needs, level of income, and other factors, you may be eligible for one of the insurance mentioned in this article. Scroll above to learn more.
Oleksandr is an expert in deep research. He covers various insurance topics across verticals, adopting to every local law.