Health insurance is an important way to protect yourself, both physically and financially. If you experience a medical issue during a temporary lapse of coverage, you may find yourself paying out of pocket for numerous bills. Some people may even avoid going to the doctor because of this, putting their health at risk.
Many people with full-time jobs have employer-sponsored health insurance policies. In 2020, employment-based health insurance accounted for 54.4% of Americans with insurance, or about 177 million people. However, this coverage is usually lost when someone leaves a job. Even if a person has a new job lined up, it can take a few weeks or longer for a new employer’s health benefits to kick in, leaving them without coverage in the interim.
If you’re in this situation, you could be in a vulnerable position. Looking into temporary health insurance between jobs may be a way to reduce your risk.
Your Options for Health Insurance Between Jobs
Depending on your situation, you may have some different options for maintaining health insurance coverage while unemployed. These choices can act as gap health insurance between jobs until your new coverage kicks in.
Continue Your Employer-Sponsored Health Plan Without Change
In some cases, companies continue to maintain an employee’s health benefits for a limited period of time after they quit, get laid off, or are terminated. For example, an employee’s last day with a company could fall on March 1st, but the company may still maintain their health benefits until the end of the month.
Every employer’s policy is different, so always check your employee handbook or explanation of benefits to see if there are details on how long healthcare coverage lasts after leaving the company. Ask the company’s benefits manager or HR department to get a specific date for the end of your policy. Knowing the exact end date of your benefits is crucial because it dictates if you need any gap coverage in the interim between your old policy expiring and your new policy with your new employer kicking in.
For instance, if you quit a job and start at a new one and your benefits from your previous employer will last until the 30th of the current month and the benefits for your new employer start on the 1st of the next month, you may not need any additional insurance. However, if your new employer’s benefits don’t kick in immediately, then you would want some insurance to cover you during the gap.
Pros and Cons of Employer-Sponsored Health Plan
Pros
Keeping your employer-sponsored health insurance when unemployed allows you to keep your same doctors and medical providers. This can be important if you’re seeing a specialist that might not be covered by a different insurance plan. You also do not have to worry about canceling any appointments you’ve had scheduled for months in advance because of changes to your insurance.
Staying with your current plan until it expires also gives you more time to investigate your options.
Cons
If you keep your employer-sponsored health plan until it expires, you may miss Open Enrollment in the Health Insurance Marketplace. Generally, Open Enrollment takes place from Nov. 1 to Jan. 15 each year. It’s possible to be eligible for a special enrollment period of 60 days after losing your employer-sponsored coverage. However, people who sign up for a health plan during special enrollment generally end up paying more than those in Open Enrollment.
Enrollment Periods
You cannot keep your old employer’s insurance forever. Some companies might let you keep it for up to a few months after you leave the company, but many end coverage on your last day of work. If you’re enrolling in new coverage with the Health Insurance Marketplace or COBRA, you have 60 days to sign up after losing your coverage. You might also be eligible for special enrollment with your spouse’s employer-based health insurance, but this varies depending on the plan.
Immediate Next Steps
If you want to continue your current employer-sponsored plan, consult with your human resources department to determine if the coverage will extend. If so, confirm when it will end.
Continue Your Employer-Sponsored Health Plan Through COBRA
COBRA — the Consolidated Omnibus Budget Reconciliation Act — is a federal regulation that lets you continue with your employer-sponsored health plan even after you leave the company. Not every employer has to offer COBRA, as it is only required if they have 20 or more employees. To be eligible, you must have been employed with the company for 50% of the workdays in the previous year and lose your employment due to a qualifying life event. Qualifying life events include:
- Voluntarily leaving a position
- Termination for anything other than gross misconduct
- A reduction in hours
- Divorcing or separating from the covered employee, meaning you receive health coverage from your spouse’s employer-sponsored plan and now are separating from your spouse
After you are terminated, your employer typically has 30 days to notify the health insurance plan of your termination. Then, the plan has 14 days to provide you with an election notice describing your rights to the continuation of coverage. After you receive this notice, you have 60 days to decide whether or not to choose continuation coverage. Finally, once you decide on coverage, you have 45 days to pay your first premium.
Your coverage would be identical to the coverage you had from your employer, but it will likely cost significantly more since your employer is no longer contributing to the costs. However, the law notes that the insurer can’t charge you more than 102% of the normal cost of the plan.
COBRA coverage lasts for either 18 to 36 months after your qualifying life event. If your benefits from your new employer kicks in before that, you can cancel the COBRA coverage at that time. The amount of time COBRA can stay in effect is determined by the qualifying life event that made you eligible for COBRA. Overall, it’s different from buying a new individual health insurance policy on your own because you don’t have a choice in plan coverages. Your only option is the plan you previously had with your former employer.
Pros and Cons of COBRA
Pros
By keeping your employer-sponsored health insurance coverage between jobs with COBRA, you can keep going to the doctors you did before. Your copays and deductible should stay the same, as well. If you’ve already met your deductible for the year, keeping this coverage also means you do not have to start over with a new deductible from another plan, which can help you save money if you have more doctor’s visits, procedures, or tests scheduled.
Cons
COBRA is expensive. You have to pay for the plan’s entire premium since your employer is no longer contributing. Considering the average annual premium for an employer-sponsored plan was $7,739 for single coverage in 2021, that means you’d be paying around $645 a month — plus an administrative fee. For family coverage, the average monthly fees are around $1,852. Keep in mind that COBRA coverage is temporary, so you will need to find a new plan eventually anyway.
Enrollment Periods
There are two main deadlines for COBRA:
- You usually have 60 days after losing your employer’s health insurance to sign up for COBRA.
- Once you elect to sign up for COBRA, you usually have another 45 days to send in your first month’s premium.
However, while the country is in the COVID-19 National Emergency, deadlines have been extended. You have up to a year to sign up for COBRA and make your first payment as long as the pandemic is ongoing.
Immediate Next Steps
If you want to continue your current employer-sponsored plan through COBRA, do the following:
- Look for an election notice to restart your workplace insurance within 45 days of your end of employment
- Make a decision within 60 days of receiving the notice
- Make your first premium payment to start coverage
Get Coverage Through Your Spouse’s Health Insurance Plan
Getting coverage through your spouse’s health insurance is easiest if you happen to lose your employer-sponsored coverage during open enrollment, which is a period that generally begins in November and ends in January. In that situation, your spouse could add you to their active health insurance plan at a time when they are able to make changes to their healthcare elections anyway.
However, even if timing does not work out and you lose your employer-sponsored health insurance outside of the open enrollment period, you can still join your spouse’s plan during the special enrollment period. This is a minimum of a 30-day period after you leave your company, during which time you are eligible to join another insurance plan.
To join their plan, you usually must fill out forms with basic information about yourself as well as submit proof that you lost or left your job and no longer have health insurance as a result. After you enroll, you may get your own insurance card that’s linked to your spouse’s plan.
Having coverage through your spouse’s employer-sponsored plan can be convenient because it’s likely less expensive than seeking your own health insurance plan from the Health Insurance Marketplace because their employer contributes to the costs. However, you are limited to the benefits and coverages they’ve selected.
If you eventually decide to go back to your own plan, call the insurer to let them know. They can likely remove you as a dependent the following month.
Pros and Cons of Spouse’s Health Insurance Plan
Pros
Adding yourself to your spouse’s coverage may be cheaper than a Health Insurance Marketplace or COBRA plan, especially if their employer is footing part of the premium bill. Also, if you’re on the same plan together, the copays and medical bills you pay count toward your collective out-of-pocket max. If you surpass the out-of-pocket max together, the insurance company will likely pay for 100% of covered expenses for the rest of the year.
Cons
Your current medical providers, treatments, or prescription drugs might not be covered under your spouse’s plan. This means you’d need to pay for them out of pocket or find services covered by the plan. You’re also limited to the type of coverage they’ve selected, meaning you cannot add on more benefits or pick a different deductible. If you require significantly more medical care than your spouse and your spouse is enrolled in a high deductible plan, you could end up paying a lot out of pocket before coverage kicks in.
Enrollment Periods
Individual insurance providers can have slightly different rules about their enrollment periods for insurance when unemployed. However, many give you 30 days to enroll after losing coverage through your job.
Immediate Next Steps
If you want to get coverage through your spouse’s plan, do the following:
- Notify your spouse’s health provider and fill out the proper paperwork
- Submit proof of job loss/loss of insurance coverage within 30 days to the spouse’s insurance provider
Purchase a Short-Term Health Insurance Plan
Short-term health insurance is a type of plan that’s typically offered for a period of 12 months or less. These plans do not have to comply with the regulations set forth by the Affordable Care Act (ACA). They can be and often are medically underwritten, meaning the provider takes a look at your medical history and can charge you higher premiums if you have pre-existing health conditions.
Another downside of short-term plans is that they don’t have to cover health benefits like maternity care, mental health care, or prescription drugs. They may also have lifetime limits on coverage. Therefore, if you have a major accident, your coverage may top out at a certain point.
However, since they usually cover emergency hospital visits, they can be good for helping you prepare for the unexpected. Additionally, coverage typically begins as soon as your application is accepted, which can be good if you unexpectedly lose your employer’s health insurance.
When you enroll, you may receive a health insurance card like you would with standard health insurance. Insurers vary with cancellation policies, but many allow you to end the policy without a penalty if you are eligible for another health insurance policy.
Pros and Cons of Short-Term Health Insurance Plans
Pros
Short-term health insurance plans can provide you with bare-bones, temporary health insurance between jobs that can cover you if you suffer an accident or health crisis. This can give you time to wait until Open Enrollment to choose a new healthcare plan. You can also pick and choose the types of coverage you want or need. Finally, because there’s usually no fee to cancel your gap health insurance when unemployed, you can end it whenever you find a more permanent insurance solution.
Cons
The deductibles for short-term health insurance are often higher than traditional health insurance, meaning you have to pay more up front for coverage to kick in. Because short-term health insurance plans are not subject to Affordable Care Act regulations, they can use your medical history to deny you coverage or charge you more, and often do not cover the 10 essential health benefits of ACA plans. Short-term health insurance is also heavily regulated or banned entirely in some states, so it is not available for all U.S. residents.
Enrollment Periods
You can enroll in short-term health insurance between jobs any time you wish because there are no enrollment periods. That means you can decide to enroll in this coverage as soon as you lose your employer-sponsored coverage or wait for a couple of months. When you find a provider, as long as you’re approved, your coverage should start within two weeks.
Immediate Next Steps
If you want to purchase short-term health insurance, do the following:
- Browse short-term health plans directly on provider websites
- Fill out an application
- Pay your premium and receive your insurance card
Purchase an Individual Health Insurance Plan
You can buy individual health insurance from the Health Insurance Marketplace. While these individual plans are offered by various insurance providers, they’re regulated by the Affordable Care Act. That means insurers can’t alter your premiums based on your medical history. Instead, your premiums are determined based on five factors:
- Location
- Age
- Tobacco use
- Plan category
- Whether or not you have dependents
Marketplace insurance is different from employer-sponsored insurance because you don’t have an employer to pay part of your costs. However, you have more plan options to choose from, and is the typical option for those who are self-employed. Marketplace plans vary from Bronze (low premiums, but higher costs for care) to Platinum (high premiums, but lower costs for care). Whatever plan you decide on, after signing up, the insurer sends a health insurance card you can use for your healthcare needs.
If you ever want to cancel your policy, you can do so again through HealthCare.gov or by calling 1-800-318-2596 (TTY: 1-855-889-4325). The cancellation could go into effect immediately or on a future day of your choosing, such as the day your new job’s health benefits take effect.
ACA Metal Tiers
There are 4 tiers of coverage when you buy a plan from the Marketplace. Each level features a different healthcare cost distribution between you and the insurance company:
- Bronze plans mean you pay 40% and the insurance company pays 60%. These plans offer lower monthly premiums, but they also have higher costs when you need care.
- Silver plans mean you pay 30% and the insurance company pays 70%. These plans offer moderate monthly premiums and costs when you need care.
- Gold plans mean you pay 20% and the insurance company pays 80%. These plans have higher monthly premiums, but costs are lower when you need care.
- Platinum plans mean you pay 10% and the insurance company pays 90%. These plans have higher monthly premiums, but costs are very low when you need care.
Pros and Cons of Individual Health Insurance Plans
Pros
With an individual health insurance plan, you have the freedom to choose the plan that offers the ideal mix between coverage and price. You could have more variety than with an employer-sponsored option. Providers also cannot discriminate against you based on your medical history, meaning costs do not go up if you have a pre-existing condition. You may even be eligible for discounts if your income is below a certain amount.
Cons
Premiums are often much higher than employer-sponsored plans as they are not subsidized by your employer. The Health Insurance Marketplace can also be difficult to use and navigate, especially if your goal is to compare and contrast plans and costs. Many Marketplace plans seem identical except for some small differing details, which can be confusing.
Enrollment Periods
If you’re looking to enroll in an individual health insurance plan from the Health Insurance Marketplace, there are specific enrollment periods you must follow:
- For 60 days after losing your employer-sponsored, you may be eligible for a Special Enrollment period. You can sign up for a new plan then.
- If you do not sign up during those 60 days, you must wait for Open Enrollment. For 2023 insurance plans, Open Enrollment is from Nov. 1 through Jan. 15.
Immediate Next Steps
If you want to purchase your own individual health insurance plan, do the following:
- Browse individual plans on the Marketplace or with a trusted insurance agent
- Narrow down your options to one that meets your needs and serves your area
- Pay your first premium for coverage to begin
Low-Income Option: Medicaid
Medicaid is a federal- and state-based program that provides free or low-cost health insurance to people with low incomes. It’s different from employer-sponsored health insurance because you usually don’t pay any premiums and don’t have a specific insurance company providing coverage. Instead, your coverage is managed by the state you live in.
Since states regulate Medicaid differently, there’s no overall guidance for what the program covers. Still, many states provide you with a health insurance card you can show at hospitals, doctor’s offices, and other healthcare providers.
Eligibility requirements also vary between states. Some states have expanded Medicaid programs to cover people that have a household income below a certain level. In the states that have expanded coverage, your income needs to be below 138% of the federal poverty level. In 2022, that means you need to earn less than $18,754 to be eligible for Medicaid. If you’re eligible, you can enroll by filling out an application on HealthCare.gov or by contacting your local Medicaid agency.
Enrollment Periods
It’s possible to enroll in Medicaid any time of year. However, make sure to double-check with your state’s Medicaid office for any specific rules. Even if you think you may be eligible for Medicaid, it’s also a good idea to keep the Open Enrollment deadlines in mind. This year, these are from Nov. 1 to Jan. 15. Signing up on the Marketplace can help you verify your eligibility.
Immediate Next Steps
If you want to enroll in Medicaid, do the following:
- Check your state’s Medicaid criteria to see if you are eligible
- Fill out an application on the Health Insurance Marketplace or through your state Medicaid agency
Low-Income Option: Subsidized ACA Plans
A subsidized ACA plan is like buying an individual health insurance plan from the Health Insurance Marketplace except that you may see some premium reductions. This may make up for the fact that you no longer have an employer footing part of the bill for your plan. Like an individual health insurance plan, you will receive an insurance card either in the mail or electronically from the insurer you choose.
There are two main kinds of ACA subsidies. The first is a premium tax credit that lowers your monthly premium. To be eligible for this credit, your income must be within 100 to 400% of the federal poverty level. In 2022, that means you have to make between $13,590 and $54,360. As long as your income is in this range, you can sign up for the tax credit when you submit your application for insurance.
The second subsidy is a cost-sharing reduction. This helps to lower your out-of-pocket costs whenever you pay for medical services. For example, you may have lower deductibles, copayments, and out-of-pocket maximums than a standard plan. You may be eligible if you make 100 to 250% of the federal poverty level — or between $13,590 and $27,180 in 2022. These benefits are applied automatically when you apply as long as you select a Silver-level plan. No other levels are eligible for this specific reduction.
Enrollment Periods
If you want to take advantage of ACA subsidies, you need to sign up for coverage on the Health Insurance Marketplace.
- For 2023 coverage, Open Enrollment is between Nov. 1 and Jan. 15.
- Outside of this time, the only way to sign up is during a Special Enrollment period. Losing your employer-sponsored health insurance gives you a special 60-day period to choose new ACA-subsidized insurance.
Immediate Next Steps
If you want to enroll in a subsidized ACA plan, do the following:
- Browse individual plans on the Marketplace or with a trusted insurance agent
- Narrow down your options to one that meets your needs and serves your area
- Fill out an application to see which subsidies you may receive
- Pay your first premium for coverage to begin
How to Maintain Dental and Vision Coverage
Many standard health insurance policies don’t include dental or vision coverage. However, it’s possible to add these coverages separately. Check with your local dentist or vision provider to see if they offer in-house payment plans. You can also look for standalone vision and dental coverage plans.
Does Contract or Freelance Work Affect Health Coverage?
While between jobs, you may choose to do freelance or gig work on the side for some extra cash, such as working for a rideshare or delivery service. The good news is that it should not affect your health insurance options. Since contract and freelance employers typically do not offer the option to enroll in health insurance, you should not be jeopardizing any coverage from your spouse’s employer or COBRA.
However, if you’re relying on your low income to make you eligible for Medicaid or ACA subsidies, be aware you may push your income over the limit. Keep track of your earnings and consider whether lower-cost health insurance or higher wages is more valuable to you.
Be Aware of Enrollment Periods
When shopping for health insurance, make sure to double-check the enrollment period timelines. These are specific spans of time where you may be eligible to sign up for insurance. If you miss them, you may not be able to sign up until the next period, and you may need a temporary coverage option.
For example, open enrollment for the Health Insurance Marketplace is generally from November 1st to January 15th each year. The special enrollment period, which you may be eligible for after losing your job, lasts for 60 days after you leave the company. You may also be able to enroll outside of the open enrollment period if you have a qualifying life event, such as getting married, having a baby, or moving to a new state.
Those enrolling in Medicaid, however, do not have to abide by enrollment periods. You may join the Medicaid program year-round.
Additional Resources
Healthcare.gov: For general information on health insurance options when between jobs: https://www.healthcare.gov/unemployed/coverage/
Medicaid.gov: To see if you qualify for Medicaid: https://www.medicaid.gov/medicaid/eligibility/index.html
COBRA: Department of Labor COBRA FAQs: https://www.dol.gov/general/topic/health-plans/cobra