What to Do About Health Insurance When You Lose a Job
COBRA vs. Marketplace
If you’ve ever been laid off from a job with health insurance, you’re probably familiar with COBRA continuation coverage. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees losing a job the right to continue health insurance benefits for a certain period of time (typically up to 18 months) at an increased personal cost.
Known for being an expensive, short-term solution, COBRA was once the only option available to cover the health insurance gap between jobs. Finding a comparable individual or family policies on the open market used to be impossible or out of reach for most people. That has changed with the passing of the Affordable Care Act (aka the ACA, and "Obamacare").
Under the ACA, the government’s Health Insurance Marketplace provides individuals a way to shop for coverage on your own, to see how individual and family plan prices compare to COBRA and decide which option makes sense for you. Keep in mind; the choice is no longer to have insurance through COBRA or have no insurance at all. Simply going without coverage is no longer an option. Even if you are in-between jobs, if you are in-between health insurance coverage, you risk owing a hefty fine.
After a Job Loss
COBRA is still offered to employees who are laid off or terminated from a job, but these days there is another more permanent solution. When you leave or lose your job, a window opens to the government’s Health Insurance Marketplace, where you can shop for plans in your state or region. Typically you can only enroll for health insurance on the Marketplace between November 15 and February 15. However, when you leave a job outside of the normal enrollment period, you have your 60-day enrollment window to shop and sign up for coverage.
Even if you love your current plan and prefer to take COBRA, it pays to visit the Marketplace and compare the costs. COBRA is generally considered the most expensive option but may be comparably priced to some plans depending on where you live and your level of coverage. Keep in mind that through the government Marketplace, you may qualify for cost-saving premium tax credits, Children’s Health Insurance Premium coverage, or free or low-cost Medicaid based on your income and dependents.
To find coverage and prices in your area, you can visit healthcare.gov and compare online or call 1-800-318-2596 with questions. You won’t know the full cost of your health coverage until you investigate and find out which options are available to you.
How to Drop It for a Marketplace Plan
If you do decide to take COBRA now, the Marketplace window will close. If you want to shop for your own coverage in the future, you will have to wait until the next open enrollment period to shop for a Marketplace plan.
You can drop COBRA at any time during the open enrollment period to shop for your own policy. However, if it’s not open enrollment period, you have to stick with COBRA coverage unless you get insurance through a new employer.
If your COBRA coverage ends, you must find health insurance on your own. If your coverage ends during a time that’s outside of the open enrollment period, the 60-day window to shop for Marketplace coverage will open to you again.
Lacking Coverage: Not An Option
Whether you decide to take COBRA or shop for a Marketplace plan, health coverage is a must. Opting out of health coverage is simply not a sensible option, for more reasons than one.