Navigating the System: When You're Between Jobs

The fear of losing your health insurance may keep you from leaving your current job. But moving on doesn't have to mean doing without coverage. If you have a spouse whose employer provides health coverage, you may be able to enroll in their plan. If you are a dependent child, you may be able to enroll in a parent’s plan.

You can also buy an individual health insurance, but these can be expensive. Luckily, the Consolidated Omnibus Budget Reconciliation Act (COBRA) gives certain employees the right to temporarily continue their health coverage after leaving their job.

Defining COBRA

COBRA was passed by Congress in 1986. It requires most group health plans to provide members with a temporary continuation of their coverage under certain circumstances, including a transition between jobs unless the job was terminated due to gross misconduct. Group plans are required to offer continuation coverage when the plans are sponsored by state and local governments or private-sector employers with 20 or more employees.

If you elect continuation coverage, you are required to pay the full cost of the plan. Your premium will be much higher after you leave since your employer probably contributed to the cost. Still, premiums under COBRA are usually less expensive than if you were to buy an individual policy.

Learning About Benefits

All members of your family who were covered by your employer’s plan are eligible for continuation coverage. Any child born or adopted during the period of COBRA coverage is also covered. You will be able to have the same coverage you had while employed.

You are eligible to continue receiving COBRA coverage for up to 18 months after termination of your job or longer under certain circumstances. You will have the chance to make the same choices as non-COBRA plan members during any open enrollment periods that occur during this time. You may have the chance to switch to an individual policy at the end of your COBRA coverage.

Choosing COBRA

Your former employer will give you a notice about your rights under COBRA when you are no longer eligible to get health coverage as an employee. Employers are required to notify the health plan’s administrators within 30 days after a COBRA qualifying event (layoff or voluntary job termination). You then must send your own notification to the administrator no later than 14 days after your former employer’s notification.

After that, you will have 60 days to decide whether to get COBRA coverage or not. You'll have another 45 days after that to pay your initial premium.

After you have elected to receive COBRA coverage, contact an administrator of the health plan to find out how you will file a COBRA claim for benefits. You also need to make sure you pay your premiums in full and on time to keep your coverage. Co-payments and deductibles must also be paid on time.

Other Options

The Affordable Care Act (ACA) went into effect in early 2014. The law lets previously uninsured people get insurance. Choices of coverage and premiums are offered through the Health Insurance Marketplace. Insurance is offered through private health insurers that let you choose the level of coverage you need. Take some time to look at plans, including out-of-pocket expenses, deductibles, participating doctors, dental care, and coverage areas.

If you have it, you can keep your COBRA coverage. But you may find less expensive options in the Marketplace. If you need more coverage or qualify for other government programs like Medicaid or Children's Health Insurance Program (CHIP), the Marketplace will share your information with the right agencies for follow-up.

Revision Information

• Reviewer: EBSCO Medical Review Board
• Review Date: 10/2021
• Update Date: 10/20/2021