Navigating Healthcare Insurance Options When Starting A New Job

Changing jobs can be stressful, and it's natural to worry about how this will impact your health insurance coverage. The good news is that you have several options to ensure you remain covered during this transition period. Here's what you need to know about changing your healthcare insurance when starting a new job.

Short-term health insurance plans

While short-term health insurance plans can provide a temporary solution, it's important to carefully consider your options and choose the plan that best meets your needs.

COBRA coverage

COBRA is a useful safety net for those in between jobs, but it can be expensive. When you are employed, your employer subsidises part of the health insurance premium. However, with COBRA, you are required to pay the entire premium yourself, plus an added 2% for administrative costs.

You have 60 days from a “qualifying event” or the date your notice is mailed (whichever is later) to enroll in COBRA. A qualifying event can be a job loss, divorce, or the death of your spouse, among others. Your former employer will send you details about how to sign up, and your coverage will be retroactive to the day after your employer coverage ends.

Health Insurance Marketplace plans

If you've left your job for any reason and lost your job-based health insurance, you can enrol in a plan through the Health Insurance Marketplace. This is a health insurance marketplace put in place by the Affordable Care Act (ACA).

You'll qualify for a Special Enrollment Period to enrol to get coverage for the rest of the year. You need to apply for Marketplace coverage within 60 days of losing your job-based coverage. Your coverage can start the first day of the month after you lose your job-based coverage.

Every state offers different plans and providers, but all plans must cover essential services such as maternity care, prescription drugs, and mental health care. ACA plans cannot discriminate based on pre-existing conditions.

There are four levels of ACA plans: platinum, gold, silver, and bronze. Each level offers different premiums and deductibles. Bronze plans generally have high deductibles, while full-coverage plans—similar to what you might have had with an employer—would be platinum. Prices vary depending on the plan, provider, and geography. If your income is between 100% and 400% of the federal poverty level, you may qualify for a tax credit that lowers your monthly premium.

Those with lower incomes may also qualify for Medicaid, especially after many states expanded the program during the pandemic. Medicaid offers low or no-cost coverage to people below a certain income threshold. You can apply for Medicaid through your state or the healthcare marketplace.

Medicaid

If you qualify for Medicaid based on your income level, your job could impact your eligibility. If your new job offers healthcare, you won't be able to continue using Medicaid. However, Medicaid will generally work with you to maintain your coverage until your probationary period in your new job passes and you are eligible to enroll in your employer's coverage. This means you won't lose Medicaid immediately, leaving you without insurance while you wait for your new insurance to start.

If you lose your Medicaid coverage due to a new job, you should qualify for a special enrollment period to get alternative health insurance. Losing Medicaid coverage is considered a qualifying life event, so you can apply for alternative health insurance outside of the regular yearly enrollment period.

If you are no longer eligible for Medicaid, you can apply for alternative health insurance on the Healthcare.gov website. You can also get short-term health insurance to fill in any gaps in coverage.

Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged personal savings account that helps those with a High Deductible Health Plan (HDHP) save money on many out-of-pocket medical expenses like doctor visits, vision and dental care, and prescriptions. An HSA gives you more control over your healthcare spending.

You can contribute funds into an HSA on a pre-tax basis to save for current and future medical expenses, putting you in charge of how you spend your healthcare dollars. HSA funds generally may not be used to pay premiums. However, by using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your out-of-pocket healthcare costs.

You can only contribute to an HSA if you have an HSA-eligible plan (sometimes called an HDHP) — generally a health plan that only covers preventive services before the deductible. An HSA may earn interest or other earnings, which are not taxable. Banks, credit unions, and other financial institutions offer HSAs.

The money in your HSA is yours for life and never expires, even if you change health plans, switch jobs, or retire. You can select from a range of mutual fund options to give your account the potential to grow tax-free over the long term to help prepare for future healthcare expenses.

Frequently asked questions