Health Insurance Between Jobs: Options for Continued Coverage

How to Get Health Insurance Between Jobs

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.

Fortunately, you have options to maintain health insurance coverage between jobs:

• Maintaining your current coverage with COBRA
• Signing up for a new health insurance plan, such as through the Health Insurance Marketplace or with a short-term health insurance option
• Enrolling in Medicaid
• Taking advantage of local programs

Learn more about what you can do to ensure you stay covered between jobs, as well as the pros and cons of each option.

Your Options for Health Insurance Between Jobs

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. If you’re in this situation, you could be in a vulnerable position. However, you have options for maintaining health insurance coverage while unemployed. These choices can act as gap health insurance between jobs until your new coverage kicks in.

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. This should not affect your health insurance options. Most contract and freelance employers do not offer the option to enroll in health insurance, so you would not be jeopardizing coverage from your spouse’s employer or COBRA. However, if you’re eligible for Medicaid or ACA subsidies, be aware that freelance work may may push your income over the limit.

Option #1: COBRA, or Maintaining Your Current Coverage

COBRA — the Consolidated Omnibus Budget Reconciliation Act — is a federal regulation that lets you temporarily keep your employer-sponsored health plan even after you leave the company. Every employer with 20 or more employees must offer COBRA as an option to departing employees. With COBRA, your coverage would be identical to the coverage you had from your employer, but usually costs significantly more since your employer is no longer contributing to the costs.

COBRA coverage can last up to 18 months after leaving your job, though coverage can extend for up to 36 months in some cases. If health benefits from your new employer kicks in before that, you can cancel the COBRA plan at that time to avoid paying for two coverages.

Eligibility Criteria

You must have been employed with the company for at least half 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

Pros and Cons of COBRA

Pros

• Continuation of coverage: 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. This can help you save money if you have more doctor’s visits, procedures, or tests scheduled.
• Familiarity with providers and benefits: 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.
• Coverage for dependents: COBRA covers your spouse and dependents if they were also covered in your previous plan, ensuring that your entire family remains insured during the transitional period.
• No pre-existing condition exclusions: COBRA plans do not have any pre-existing condition exclusions or waiting periods, which can be beneficial for those with ongoing medical needs.
• Duration of coverage: COBRA coverage can last up to 18 months or longer in some cases, giving you time to find a longer-term coverage option, such as another employer-sponsored plan at a new job or a new plan from the Health Insurance Marketplace.

Cons

• High costs: COBRA coverage can be expensive, as you are responsible for the entire premium, including the portion previously subsidized by your employer. Considering the average annual premium for an employer-sponsored plan was $7,739 for single coverage in 2021, that means you could pay around $645 a month — plus an administrative fee. For family coverage, the average monthly fees are around $1,852.
• Limited enrollment period: You have a limited window to enroll, and if you do not enroll within this period, you will lose eligibility for COBRA coverage.
• Employer bankruptcy: If your former employer goes bankrupt or discontinues their group health plan, you may lose COBRA coverage.
• Lack of portability: If you move to a different state or region, your COBRA coverage may not be portable, which can limit your access to healthcare providers and services in your new location.

How to Enroll In COBRA

Those who wish to utilize COBRA can expect to follow this timeline:

1. Your employer typically has 30 days to notify the health insurance plan of your policy expiring once you are no longer employed.
2. The plan has 14 days to provide you with an election notice describing your rights to the continuation of coverage.
3. After you receive this notice, you have 60 days to sign up for COBRA.
4. Finally, once you decide to sign up for COBRA, you have 45 days to pay your first premium.

It is important to note that the amount of time COBRA can stay in effect is determined by the qualifying life event that made you eligible for COBRA.

Option #2: Short-Term Health Insurance

Short-term health insurance is a type of plan that’s typically offered for a period of 12 months or less, though some states allow individuals to renew coverage for up to 36 months. These plans are designed to act as a stop-gap between major medical insurance to ensure you remain protected while you look for another long-term option or wait for the next applicable enrollment period.

However, these plans do not have to comply with the regulations set by the Affordable Care Act (ACA), which means eligibility and benefits can be limited, though it also means short-term plans often cost less than traditional health insurance.

Pros and Cons of Short-Term Health Insurance Plans

Pros

• Year-round enrollment: Unlike traditional health insurance, you can apply for short-term health insurance at any time during the year, making it a convenient option for individuals who need immediate coverage.
• Quick enrollment and coverage: Coverage typically begins as soon as your application is accepted, which can be good if you unexpectedly lose your employer’s health insurance.
• Flexible coverage duration: Short-term plans can last anywhere from 30 days to 364 days, depending on your state’s regulations. Some states also allow coverage to be renewed for up to 36 months. This allows you to choose a coverage period that aligns with your needs. There’s usually no fee to cancel your gap health insurance, so you can end it whenever you find a more permanent insurance solution.
• Affordability: Short-term health insurance plans typically have lower premiums compared to traditional health insurance plans, making them a more affordable option for individuals in need of temporary coverage.
• Protection against unexpected medical emergencies: Short-term health insurance usually covers emergency hospital visits, which could otherwise become financially devastating if you did not have any coverage at all.

Cons

• Limited benefits: Short-term health insurance plans generally do not cover the same range of benefits as traditional health insurance. For example, short-term health plans often exclude coverage for preventive care, maternity care, mental health services, and prescription drugs.
• Medical underwriting: Short-term health insurance plans are medically underwritten, meaning the insurer consults your medical history and can charge you higher premiums if you have pre-existing health conditions, or deny coverage altogether.
• Pre-existing condition exclusions: Short-term health insurance plans often exclude coverage for pre-existing conditions, which could leave you without coverage for any ongoing medical needs.
• No guarantees of renewal: While some short-term health insurance plans can be renewed, there is no guarantee that your insurer will allow you to renew your coverage, potentially leaving you without insurance after the initial term.
• Lack of comprehensive coverage: Short-term health insurance plans are designed to cover unexpected medical expenses and may not provide comprehensive coverage for more complex healthcare needs.

How to Enroll In Short-term Health Insurance

Those who wish to utilize short-term health insurance can expect to follow these steps:

1. Browse short-term health plans directly on insurance company websites, or with the help of a trusted and licensed insurance agent.
2. Complete an application, which typically requires some basic information about yourself and your health history. You may be asked to submit to a medical exam or questionnaire.
3. If your application is accepted, pay your first premium and your coverage should start within two weeks.

Option #3: Health Insurance Marketplace Plans, or Purchasing a New Individual Plan

You can buy individual health insurance from the Health Insurance Marketplace. These plans are often called ACA plans because they’re regulated by the Affordable Care Act. That means insurers cannot alter your premiums based on your medical history. Instead, your premiums are determined based on 5 factors:

• Location
• Age
• Tobacco use
• Plan category
• Whether or not you have dependents

In addition, all of these plans must cover the ACA’s 10 essential health benefits. Marketplace insurance is different from employer-sponsored insurance because you do not have an employer to pay part of your costs. However, you have more plan options to choose from. Marketplace plans are also categorized by metal tiers: Bronze, Silver, Gold, and Platinum. These tiers denote expected costs, not quality of care.

Metal Tiers

Metal Tier	You Pay	Insurance Pays
Bronze	40%	60%
Silver	30%	70%
Gold	20%	80%
Platinum	10%	90%

Each metal level features a different healthcare cost distribution between you and the insurance company:

• Bronze: These plans offer lower monthly premiums, but they also have higher costs when you need care. They may be suitable for those who are generally healthy, use few medical services, and want to minimize their monthly premium costs.
• Silver: These plans offer moderate monthly premiums and costs when you need care and are a good option for those who want a balance between premium costs and out-of-pocket expenses. This is also the only tier that qualify for cost-sharing reductions, which is a type of income-based federal discount offered to eligible individuals to help them save on health insurance costs.
• Gold: These plans have higher monthly premiums, but costs are lower when you need care. This could be beneficial for those who expect to use more medical services or want to minimize their out-of-pocket costs.
• Platinum: These plans have higher monthly premiums, but costs are very low when you need care. Platinum plans are best suited for those who require frequent medical care, have chronic health conditions, or prefer the lowest possible out-of-pocket expenses.

A final plan type is catastrophic plans. These are available to those under 30 years old or those who are eligible for a hardship exemption, as they feature low monthly premiums but high deductibles. As such, they are designed for major medical emergencies and are best suited for young, healthy individuals who want to protect themselves but likely will not require regular medical care.

Subsidies For Health Insurance Marketplace Plans

Some individuals may be eligible for subsidies, which would lower the overall cost of their ACA health insurance plan. There are two main kinds of ACA subsidies:

• Premium tax credit: This subsidy lowers your monthly premium. To be eligible for this credit, your income must be within 100 to 400% of the federal poverty level. As long as your income is in this range, you can sign up for the tax credit when you submit your application for insurance.
• 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. 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.

Pros and Cons of Individual Health Insurance Plans

Pros

• More options: 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.
• ACA compliance: Due to ACA regulations, insurers cannot discriminate against you based on your medical history, meaning costs do not go up if you have a pre-existing condition.
• Cost-saving reductions for eligible plans: You may be eligible for discounts if your income is below a certain amount and you are enrolled in a Silver plan.
• Comprehensive care: These plans are designed to provide comprehensive care from preventive services, to routine care, to medical emergencies.

Cons

• High premiums: Premiums are often much higher than employer-sponsored plans as they are not subsidized by your employer.
• Too many options: Though having many options is a benefit, it can also be overwhelming. Many Marketplace plans seem identical except for some small differing details, which can be confusing.
• Strict enrollment periods: If you are not eligible for a Special Enrollment Period, you are limited to the annual Open Enrollment Period to sign up for a new plan.

How to Enroll In an Individual Plan From the Health Insurance Marketplace

Those who wish to utilize a plan from the Health Insurance Marketplace can expect to follow these steps:

1. Browse available health plans in your area on either the federal Health Insurance Marketplace website or your state’s Marketplace website. You may also work with a trusted and licensed insurance agent instead.
2. Complete an application, which typically requires some basic information about yourself. As your health status is not considered for coverage, you will not be asked to submit to a medical exam or questionnaire.
3. When your application is accepted, pay your first premium and your coverage will begin.

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 the Open Enrollment Period. For 2024 insurance plans, this period runs from November 1 through January 15 of the following year in most states.

Option #4: Get Coverage Through Your Spouse’s Health Insurance Plan

If you lose your health insurance coverage during the Open Enrollment Period (OEP), your spouse could add you to their active health insurance plan right away. If you lose your employer-sponsored health insurance outside of the OEP, you can still join your spouse’s plan during the Special Enrollment Period that follows losing employer-sponsored health insurance. This is a 30-day period after you leave your company, during which time you are eligible to join another insurance plan.

Pros and Cons of Spouse’s Health Insurance Plan

Pros

• Affordability: 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.
• Coordination of benefits: 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

• Change in benefits and network: 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.
• Limited to spouse’s plan: You’re 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.

How to Enroll In Your Spouse’s Plan

Those who wish to be added to their spouse’s plan can expect to follow these steps:

1. Notify your spouse’s health insurance company to understand their process for adding someone to an existing plan.
2. Complete an application with basic information about yourself.
3. You may also need to submit proof that you lost or left your job and no longer have health insurance as a result.
4. After you enroll, you may get your own insurance card that’s linked to your spouse’s plan.

Option #5: Medicaid

Medicaid is a federal- and state-based program that provides free or low-cost health insurance to people with low incomes, as well as pregnant people and those with certain disabilities. It’s different from employer-sponsored health insurance because you usually do not pay any premiums and do not have a specific insurance company providing coverage. Instead, your coverage is managed by the state you live in.

States regulate Medicaid differently, but all Medicaid programs must cover inpatient and outpatient hospital care, physician services, lab tests, pediatric care, and more. The goal is to have Medicaid provide comprehensive health coverage.

Eligibility Criteria

Eligibility requirements vary by 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 2023, that means you need to earn less than $20,120 to be eligible for Medicaid.

How to Enroll In Medicaid

Those who wish to enroll in Medicaid can expect to follow these steps:

1. Verify that you are eligible based on your state’s criteria.
2. Complete an application with basic information about yourself either through HealthCare.gov or by contacting your local Medicaid agency. Be prepared to provide proof of income.
3. After you enroll, you may get your own insurance card for Medicaid.

Unlike traditional health insurance, 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.

Which Option Should You Choose?

	COBRA	Short-term Health Insurance	Individual Marketplace Plan	Spouse’s Plan	Medicaid
Coverage Length	18-36 months	12-36 months	As long as you pay premiums	As long as you pay premiums	As long as you meet eligibility criteria
Premium Cost	102% of the normal cost of the plan	Less than traditional health insurance	Varies	Varies	$0
Out-of-pocket Costs	Varies	Varies	10-40%	Varies	None
Benefits	ACA compliant; full benefits	Exclude coverage for preventive care, maternity care, mental health services, and prescription drugs	ACA compliant; full benefits	ACA compliant; full benefits	ACA compliant; full benefits
Enrollment Period	60 days after job loss	Year-round	60 days after job loss (or Open Enrollment November 1 to January 15)	30 days after job loss	None

When you’re in the process of transitioning between jobs, choosing the right health insurance plan can seem like a daunting task, especially with multiple options available. However, there are a few factors you can take into account to help you make an informed decision on which options are best suited to your specific needs.

• Assess your needs: Before jumping into a type of coverage, consider how long you expect to be off work and how long you’ll need health insurance in between jobs. For example, if you think you can get a new job within a couple of months, COBRA or short-term health insurance may be best.
• Evaluate overall costs: Plan premiums are higher for COBRA, but it may be worth it if you have a lot of healthcare needs and have already met your deductible on your current plan. Out-of-pocket costs are higher on short-term health insurance, but premiums are lower than the other options. And both Marketplace and spouse plans have a good mix of premium vs. out-of-pocket costs, but you have to start back at square one when it comes to your deductible.
• Compare benefits: Essential benefits, like annual wellness visits, mental health care, and vaccinations, are not covered by short-term health insurance. If you need a plan with full benefits, consider one of the other options. Also see which plans include your preferred healthcare providers within their networks.
• Consider enrollment timing: There 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 year-round enrollment coverage option, such as short-term health insurance or Medicaid.
• Consider plan quality: Different insurance companies have different reputations. Some might have better customer service and support, so try to stick with those options. Research reviews of the insurer to see what other customers think of it before committing.

What to Do Once You Get a New Job

Once you get a new job, it’s time to cancel your gap health insurance. Your new employer likely will offer more affordable and comprehensive coverage than short-term health insurance, COBRA, or individual Marketplace plans. Compare your new insurance offerings with your spouse’s plan carefully, however, as you may find the plan you’re on is better. If you’re on Medicaid, make sure to update your state officials so they know you are no longer eligible for the program

Putting It All Together

Finding temporary health insurance between jobs is inconvenient but necessary. Luckily, there are plenty of health insurance options to choose from. COBRA is good if you liked your old insurance and already paid a lot toward your deductible. However, if you think it might be a while before you get a new job, consider signing up for a Marketplace plan or enrolling in your spouse’s insurance.

These plans do not increase premiums for pre-existing conditions like short-term insurance can. But, if you’re healthy and want emergency-only coverage, short-term health insurance is more affordable. Finally, Medicaid is a good pick if you’re struggling financially and meet your state’s requirements.

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