Job Change: Insurance Considerations

Changing jobs can be stressful, and one of the biggest concerns is often whether there will be continued health insurance coverage during the transition period. It's important to know your options to ensure you remain insured. When you leave a job, you will likely lose your employer-sponsored coverage, and there may be a waiting period before you qualify for health insurance at your new job. To bridge this gap, you can consider the following options:

- Transition to your new job-based coverage if you're starting a new job soon after leaving your old one.

- Stay covered by your old plan temporarily, as some employers offer coverage for a short time after your departure.

- See if you're eligible for continued coverage under COBRA (Consolidated Omnibus Budget Reconciliation Act), which allows you to retain your previous employer-sponsored coverage for up to 18 months, although it can be expensive.

- Inquire about prolonged coverage under your current plan if you have anticipated care needs.

- Look into government-sponsored programs like Medicaid, which provides no-cost health insurance for those who qualify based on income.

- Enroll in a Health Savings Account (HSA) if you have specific health concerns and associated expenses.

- Enroll in health insurance independently, as losing job-based coverage is often considered a qualifying life event that allows you to sign up outside of the open enrollment period.

Weigh up the cost of COBRA insurance

COBRA insurance can be expensive. When you leave your job, you can no longer benefit from your employer contributing to your health insurance costs. With COBRA, you are responsible for paying the entire premium plus up to a 2% administrative fee. This means that, on average, you could be paying over $1,000 a month for family coverage.

However, it's important to note that the actual cost of COBRA insurance coverage hasn't changed from when you were employed. It may just appear more expensive because the responsibility for paying the full premium has shifted from being shared between your employer and yourself, to being solely your responsibility.

There are a few ways to calculate your monthly COBRA costs:

• Identify the amount deducted from your paycheck for health insurance and add this to the amount your employer contributed. This will give you an estimate of the total monthly cost for continuing your coverage under COBRA.
• Use your W-2 form: in Box 12, Code DD shows the total annual cost of employer-sponsored coverage. Divide this by 12 to estimate the monthly COBRA premium.
• Use the COBRA Premium Calculator for a more precise calculation.

It's worth noting that COBRA is often more expensive than marketplace plans, as the government doesn't subsidize any of the costs. However, COBRA could be worth considering if you can't find a better alternative and you want to continue with the same network and providers, especially if you have a lot of medical needs.

If you're concerned about the cost of COBRA, there are some options for financial help:

• You can use a Health Savings Account (HSA) to pay your COBRA premiums.
• The U.S. Department of Labor offers a Health Coverage Tax Credit (HCTC) which pays 72.5% of premiums if you lost your job due to the "negative effects of global trade".

Compare with a short-term health plan

When changing jobs, you may be faced with a waiting period before you qualify for health insurance. To avoid a lapse in coverage, you can consider a short-term health plan. Short-term health plans are a temporary solution to bridge the gap in coverage when changing jobs. They are typically more affordable than long-term plans but offer limited benefits.

Short-term health plans are available for varying lengths of time, ranging from one month to nearly three years. They are often fast to apply for and can take effect as soon as the day after your application is received. Additionally, short-term plans offer flexibility, as you can cancel at any time without penalty.

However, it is important to note that short-term plans do not cover pre-existing conditions and may not cover essential health benefits such as maternity care, mental health services, and prescription drugs. They also have high out-of-pocket costs and are not available in all states.

In contrast, COBRA insurance allows you to retain your previous employer-sponsored coverage for a temporary period. While COBRA provides continuity of coverage, it can be expensive as you have to pay the full cost yourself.

When considering a short-term health plan, it is essential to weigh the pros and cons and carefully review the plan details to understand the limitations of coverage.

See if you qualify for Medicaid

If you've lost your job-based health insurance, you may be eligible for Medicaid, a medical insurance program jointly funded by the federal government and the states. Medicaid provides essential medical coverage to low-income individuals and families, and/or people with disabilities or chronic illnesses.

Medicaid eligibility is based on several factors, including income, household size, and other specific criteria. To qualify for Medicaid, your income must be below a certain threshold, which is generally set by the federal government each year and tied to the poverty line. The income thresholds vary depending on the number of people in your household and the state in which you live. For example, the income range for a household of one is $16,970-$25,520, while for a household of four, it is $34,846-$52,400.

In addition to income, other factors that may impact your eligibility for Medicaid include medical need, household size, disability status, and age. If you are over 65, the eligibility requirements are more complex. It is worth noting that Medicaid eligibility is not solely based on income, and there is no limit to the number of hours someone on Medicaid can work.

To determine your eligibility for Medicaid, you can check your state's Medicaid website or contact your state's Medicaid office or a local healthcare assistance program. They will provide personalized information based on your specific circumstances and guide you through any necessary reporting or application processes. It is important to promptly notify your state's Medicaid office of any changes in your income or employment status, as failing to do so could result in complications with eligibility and coverage.

If you are no longer eligible for Medicaid due to increased income from a new job, you may qualify for other health insurance options, such as coverage through the Health Insurance Marketplace or other state-based programs. You can also explore alternative coverage options, such as short-term health insurance or catastrophic health insurance plans, to ensure you have continuous health insurance coverage.

Get a Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged account that can be used to pay for qualified medical expenses, including copays, prescriptions, dental care, contacts and eyeglasses, bandages, and X-rays. It is a special bank account created specifically for medical expenses.

With an HSA, you can set aside money on a pre-tax basis to pay for qualified medical expenses. This means that you may be able to lower your out-of-pocket health care costs. HSA funds generally may not be used to pay premiums.

You are eligible for an HSA if you have a High-deductible health plan (HDHP). You are not eligible if you have Healthcare coverage beyond qualified health plans (including Medicare enrollment) or if you are being claimed as a dependent on someone's tax returns.

You can open an HSA through your employer or on your own. Banks, credit unions, and other financial institutions offer HSAs.

If you are between jobs, an HSA can be a good way to ensure you have health coverage during the transition.

Enroll in health insurance independently

Enrolling in health insurance independently is a great option if you're in between jobs or your new employer doesn't offer group coverage. You can take advantage of a qualifying life event, which opens a special enrollment period for you to buy your own individual health insurance plan. This gives you more choices and control over your coverage. Here are some steps and tips to guide you through the process:

• Determine your needs and budget: Consider your health concerns, expenses, and the level of coverage you require. Evaluate your financial situation and decide how much you can comfortably spend on monthly premiums and out-of-pocket costs.
• Compare different plans: Research and compare various health insurance plans available in your area. Look at the scope of benefits offered, including hospitalisations, regular checkups, and prescription medications. Choose a plan that best suits your needs and budget.
• Understand plan types and costs: Health insurance plans are typically categorised into metal levels—Bronze, Silver, Gold, and Platinum. Bronze and Silver plans usually have lower premiums but higher out-of-pocket costs, while Gold and Platinum plans have higher premiums but lower out-of-pocket expenses.
• Consider ACA exchanges or individual insurance: The Affordable Care Act (ACA) ensures that insurers accept you regardless of your health status, and you won't be charged extremely high premiums if you have pre-existing conditions. ACA exchanges offer subsidies and tax credits to offset potentially higher premiums.
• Look into short-term health plans: If you only need temporary coverage, consider short-term health plans that can bridge the gap between jobs. These plans are typically more affordable but have limited benefits and higher out-of-pocket costs. Be aware that some states have restrictions on short-term plan durations.
• Explore Medicaid options: If your income meets certain requirements, you may be eligible for Medicaid, a federal and state-run program that provides no-cost health insurance. Each state has its own Medicaid program with varying eligibility criteria, so be sure to check your state's guidelines.
• Act promptly: Remember that you usually have a short window of time (up to 60 days after losing coverage) to make health insurance changes. Missing this deadline could result in a wait of up to 10 months for the next open enrollment period.

By following these steps, you can enrol in health insurance independently, ensuring that you have the coverage you need during a job transition or when your employer doesn't offer group coverage.

Frequently asked questions