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I’m suddenly unemployed. Now what?

Weigh your options and decide if COBRA is right for you.

Key Takeaways

  • Continuing your existing employer coverage upon termination is an option you can explore under COBRA.

  • Insurance companies offer short-term health insurance policies to help bridge the gap between comprehensive coverage.

  • Losing health insurance due to unemployment is considered a Qualifying Life Event (QLE)Qualifying Life Events (QLE) are life changes that allow you to enroll in a new health insurance plan during a Special Enrollment Period. These include having or adopting a child, losing other coverage, marriage, a change of income and moving. and allows you to purchase individual health insurance within 60 days of your termination.

  • Purchasing a High Deductible Health Plan (HDHP) and opening a Health Savings Account (HSA) is a great way to save money month-to-month while also receiving quality insurance coverage.

The word COBRA displayed on the front page of a clipboard.

Unemployed doesn’t have to mean uninsured.

If you’ve suddenly found yourself unemployed, you may be surprised to know that you still have options when it comes to finding health insurance. COBRA temporarily allows you and your dependents to stay on your current health plan [1] after losing coverage due to voluntary or involuntary job loss, reduction in hours worked, a job transition, death, divorce, and other life events.

If you choose COBRA, you will be required to pay your health insurance premium on time and likely pay a 2% administrative fee. Your location and plan determine your eligibility to remain on COBRA. States and plans may offer extensions beyond the federal requirement of 18 months.

COBRA allows you to keep your existing coverage upon becoming unemployed; however, the cost can be substantial.

Explore short-term coverage.

Individual health insurance carriers offer “short-term” health insurance plans to help bridge the gap between coverage. Healthy individuals and families typically use short-term health insurance plans without comprehensive coverage as an “affordable safety net.” Individual states have different rules for how long you can stay on a short-term plan and what they cover and exclude, so be sure to look into your state’s policies.

Enroll in a High Deductible Health Plan.

Losing coverage due to a loss of employment or reduction in hours is considered a Qualifying Life Event. You have 60 days from your date of termination to purchase an individual health insurance plan.

A  High Deductible Health Plan (HDHP) paired with a Health Savings Account (HSA) is a great way to save money on monthly premiums and accumulate funds for future healthcare expenses. In addition to lower monthly premiums, enrolling in an HDHP qualifies you to open an HSA. This bank account allows you to save tax-deferred money for future qualified medical expenses. The money accumulates tax-free interest.

HDHPs are typically good options for younger, healthier individuals and families.

Money-Saving Tips

If you’re unemployed, you’re probably looking to cut costs and save money. Here are some other tips for saving money on healthcare:

  • Negotiate healthcare prices before receiving the service.
  • Always ask for generic prescriptions over brand-name.
  • Compare prescription costs between pharmacies or see if the insurer provides mail-order pharmacy benefits.
  • Compare family health plans versus getting an individual policy for each family member. Depending on the health of the family, it may be cheaper to get different policies.
  • If applicable, add funds to your HSA at the beginning of the year or when first opening the account to collect more interest.


Who is eligible for COBRA?

To be eligible for COBRA coverage, your previous group health plan must be covered by COBRA; a qualifying life event must occur; you must be a qualified beneficiary for that event.

How long do I have to elect COBRA?

If you are eligible for coverage, you have 60 days from the date you lose coverage to elect COBRA continuation.

If I waive coverage during the election period, can I change my mind later?

Suppose you waive COBRA coverage during the election period. In that case, you must be permitted later to go back on your waiver of coverage and elect coverage as long as you do so during the election period. Then, the plan needs only to provide continuation beginning the day you go back on the waiver.

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