How long do you have health insurance after termination?

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There is no specific timeframe for how long an employer must keep your health insurance coverage after a job termination. Instead, the business makes that decision.

Some companies may end health insurance on the day of termination. Another may wait until the end of the month. Still others may give you a few months of coverage to help while you look for a new job.

There isn’t a law that demands coverage for a minimum period. However, an employer needs to allow you access to its health insurance plan for at least 18 months after termination through COBRA.

Key Takeaways

After leaving their jobs or after termination, employees can get benefits from COBRA health insurance.
Most employees can keep their COBRA coverage for 18 months after the termination.
Employees who sign up for COBRA pay up to 102% of the health care cost without seeking help from the business.
You will get information about COBRA benefits after termination and 60 days to decide on whether you want to sign up for COBRA insurance.

COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, requires that private employers with at least 20 employees offer COBRA benefits to former employees. One exception is if the employee is fired for “gross misconduct.”

Former employees get to keep the health insurance coverage through COBRA, but there is a vital caveat — you’re responsible for all health plan costs. The employer won’t help anymore.

COBRA provides you the peace of mind of keeping the same health coverage, but that comes with a much higher price tag.

How long does COBRA coverage last?

Most employees can keep COBRA coverage for 18 months after termination.

Employees, spouses and dependent children can keep it for 18 months if the employee was terminated and it wasn’t for gross misconduct. Those people are also eligible if the company reduces the employee’s hours and the person is no longer eligible for employer-sponsored health insurance.

COBRA insurance can last longer depending on the situation. Someone with a total disability can keep it for 29 months. Also, other instances can allow people to keep COBRA for 36 months. These situations include covering a spouse after the employee’s death, a divorce or legal separation and a dependent child who loses coverage.

Does my health insurance end the day I get fired?

How long you have health insurance after getting fired depends on the company for which you worked. Most employer-based health insurance plans usually end on your last workday or at the end of the month.

However, your employer may let you stay on its health insurance for a month or two after you get fired. But if there is no grace period, you must find new health insurance immediately.

However, if you lose your employer-sponsored health insurance, it is typically considered a qualifying event enabling you to enroll in another health plan, such as your spouse.

What happens to insurance when you get fired?

Usually, your health insurance coverage will end when you stop working. The details may vary by company, so you should discuss this with your human resources manager. Some companies may let you keep your health insurance coverage until the last day of the month when you get fired. But, for others, your health insurance ends the day you leave your job.

If you lose your job, you can continue your health insurance coverage for 18 months with COBRA. However, you will have to pay the full premium. You can use your health savings account if you have a high deductible plan to pay for the COBRA monthly premiums. However, some may find COBRA’s premiums too expensive.

If you find COBRA too costly, you can consider buying insurance through the Affordable Care Act insurance marketplace. If you’re out of a job and your income drops, you might qualify for a premium tax credit, which could significantly lower your premiums.

How long does an employer have to provide health insurance after termination?

COBRA eligible employees have the right to continue their health insurance coverage after they’re terminated.

To be eligible for COBRA, the employee must be enrolled in a group health insurance plan at the time of their termination. The health insurance coverage can be continued for up to 18 months, although it may be extended to 36 months in certain circumstances.

Is there a grace period for health insurance after termination?

No, federal law mandates a grace period for health insurance after termination. Your employer may decide to keep you on its insurance after you’re terminated, but sometimes there is no grace period at all.

After that, you will need to find new health insurance coverage. You may be able to find health insurance through another job, you may be able to go on your domestic partner’s plan, or you may need to purchase an individual health insurance policy.

When must you decide on a COBRA plan?

You’ll receive COBRA benefits information after termination. You then have 60 days to decide whether to take the coverage.

Coverage is retroactive to your termination. You can take all of those 60 days to decide whether to enroll in a COBRA plan. You’ll have to pay the full 60 days of premiums, whether you enroll the first day or the 60th day once you sign up.

You can cancel COBRA at any time within your benefit period, which is usually 18 months. You’ll have access to that coverage as long as you pay your premium and your former employer offers group health insurance. If your previous job drops group health coverage, you won’t be eligible for COBRA any longer.

Also, you may decline COBRA coverage and your spouse or dependent could accept it. That’s allowable.

How much does COBRA coverage cost?

Members with COBRA coverage pay up to 102% of the health plan costs with no help from the business.

That can lead to exorbitant costs. The average annual family premiums for an employer-sponsored health plan was more than $20,000 in 2019. The employee often picks up about one-quarter to one-third of those costs. The business picks up the rest.

However, with COBRA insurance, the individual pays for the entire premiums and up to an additional 2% administrative fee.

Other ways to get health coverage after termination

You may be eligible for health plans other than COBRA. For instance, your spouse may have access to health coverage at his or her job. That might be the easiest way to get coverage.

A spouse’s plan isn’t the only other option, though. Here are three different possible options:

Individual health insurance — Individual health plans — either through the Affordable Care Act exchanges or outside of that marketplace — offers similar coverage to an employer-sponsored plan. An ACA plan provides comprehensive health benefits, but they can be pricier than an employer plan. However, you can receive subsidies and tax credits if your income is below 400% of the federal poverty level, which reduces an ACA plan’s costs.
Medicaid — Medicaid offers comprehensive benefits at minimum costs for lower-income Americans. Thirty-seven states expanded Medicare eligibility. In those states, people with incomes up to 138% of the federal poverty level are eligible for Medicaid. Premiums are based on your income. Millions of Americans are eligible for Medicaid and can be a low-cost, comprehensive health plan option if you lose your job.
Short-term health plan — Most Americans are eligible for short-term health plans. These low-premium plans aren’t technically considered health insurance under the ACA. They don’t offer the comprehensive benefits found in health insurance plans. Many don’t have prescription drug coverage, mental health and maternity care. These plans can also have high out-of-pocket costs. However, short-term plans can serve as a bridge to future health coverage once. These plans last one year and you can request two extensions. A handful of states don’t allow short-term plans and others have length limitations. Make sure to read the fine print and understand what a specific short-term health plan covers and doesn’t cover.

A job termination is stressful enough, but the added burden of losing your health insurance makes it much worse. You have multiple options if you lose your employer-sponsored health insurance depending on where you live, your income and whether your spouse has access to coverage.

Sources:

Delta Dental “3 Dental Insurance Options if You Lose Your Job “Accessed July 2022.

K Health “When Does Health Insurance Expire After Leaving a Job “Accessed July 2022.

Healthcare.gov “If you lose job-based health insurance “Accessed July 2022.

Shivani Gite

Contributing Writer

Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions.