When changing jobs, the high cost of health insurance may tempt you to temporarily do without. Although many doctors and hospitals are making self-pay a more affordable option when they can, one major illness or mishap is often still enough to cause financial carnage.
There are several options available to you if you need a temporary plan to keep you covered while you look for a new job. Take a deep breath, explore all your options carefully and choose the coverage continuation option that's best for you and your family. It probably won't be going without and hoping for the best.
One option for health insurance coverage is through the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows former employees and their dependents to keep their existing group health insurance coverage under the company's group rate. This law applies only to company's with 20 or more employees.
Under COBRA, you can keep your current coverage, but only if you pay the entire cost of the premium yourself - including the amount your employer paid for you when you were working. Although potentially costly, COBRA lets you keep your existing coverage and continue seeing the same doctors. Individuals have 60 days to decide whether to elect COBRA continuation, and upon election, 45 days to pay the first month’s premium.
Spouse or Parent
The Health Insurance Portability and Accountability Act (HIPAA) offers special enrollment rights for qualifying life change events, which include changing jobs. This means you can get health insurance coverage through your spouse or parents without waiting for the plan's open enrollment period.
If electing this option, you must request coverage under your parent's or spouse's plan within 30 days of leaving your job. Note that while you can always join your spouse's plan, you can only join a parent's health insurance if you are single and under the age of 26. You must remove yourself from a parent's plan as soon as you are once again eligible for your own insurance.
If other options are not available to you, consider purchasing an individual medical insurance policy. You can shop for an individual plan on your own or apply for coverage through the federal government's Health Insurance Marketplace. Available online and via telephone at HealthCare.gov or by calling 1-800-318-2596, the marketplace helps match individuals with affordable health insurance coverage.
In addition, qualifying individuals can receive substantial tax credits to help pay their insurance premiums. The Health Insurance Marketplace will also check to see if you are eligible for free or reduced cost health care through a Medicaid program.
One other alternative is a short-term health insurance plan. By law, these plans provide coverage for only three months at a time. If you need coverage for longer, you must reapply and begin a new three-month plan.
While plans vary, most short-term policies offer only major medical coverage. You would still be responsible for the costs of doctors' visits, prescription medications and some other expenses. These plans are much less expensive, however, than COBRA benefits and more extensive individual plans.
New Employer Plan
Once you have accepted a new position, inquire about health insurance coverage and make proper arrangements to avoid a lapse in coverage Confirm the effective date of your new employer's plan with your human resources representative or plan administrator.
Knowing when your new plan starts will tell you exactly when you can cancel your temporary coverage without leaving yourself exposed. Your new insurance company may request a letter of previous coverage to process your application. You can simply request this letter from your previous insurer. They are legally obligated to provide it and will happily do so.
- U.S. Department of Labor: Health Plans & Benefits: Continuation of Health Coverage - COBRA
- U.S. Department of Labor: Health Plans & Benefits: Portability of Health Coverage
- eHealthInsurance: Short Term Health Insurance Can Help in These Situations
- U.S. Department of Labor: FAQs on COBRA Continuation Health Coverage
- Center for Medicare & Medicaid Services: Health Insurance Market Reforms
- Healthcare.gov: Getting Health Coverage Outside Open Enrollment