What happens to your health insurance after your last day?

Your final paycheck is on its way, and you no longer have to pretend to enjoy those team-building exercises. But what happens to your health insurance after leaving your job? 

Losing your employer-sponsored health insurance doesn’t necessarily mean you’re immediately uninsured. You may be able to keep your existing plan or find coverage elsewhere. The trick is knowing when your benefits end, what your options cost, and how fast you need to act.

Know your benefits expiration date

Your health insurance doesn’t necessarily disappear the moment you clock out for the last time. Depending on your employer’s plan, coverage might end on your last day, or it could continue through the rest of the month. 

Don’t wait until you’re standing at the pharmacy counter with a useless piece of plastic formerly known as your insurance card. Ask HR for the exact termination date for your coverage. If you’re changing jobs, you’ll also want to check when new benefits begin. If there’s a waiting period, you don’t want to get stuck without coverage between jobs. 

And if that happens – or you don’t have a new job with new benefits waiting for you – you have options. Losing job-based coverage typically qualifies you for a Special Enrollment Period, even if you voluntarily quit. 

Not sure when you’re allowed to enroll? See our breakdown of health insurance enrollment deadlines.

COBRA lets you stay (for a price)

Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance allows eligible workers to temporarily keep their existing coverage, usually for up to 18 months. Federal COBRA typically applies to employers with at least 20 employees, although some states have similar protections for smaller businesses. 

You may qualify for COBRA even if you were fired, although there’s an exception if you were terminated for gross misconduct.

COBRA lets you keep your doctors, specialists, and existing benefits. Unfortunately, your employer’s contribution has already cleared out its desk. Under COBRA, you may owe the entire premium, plus an administrative fee up to 2%. So, if you paid $150 per month while your employer covered the rest of a $700 premium, your new bill could be $714. Same insurance, vastly different price. 

You’re typically given 60 days to elect COBRA. That window begins when your old coverage ends or when you get your election notice, whichever is later.  After you enroll, you’ll have at least 45 days to make your first payment. Once you enroll and pay, coverage can be retroactive to when your old plan ended. Unfortunately, that retroactive coverage also comes with retroactive premiums. 

So, COBRA lets you keep your old plan, but can your budget handle hundreds more per month? Luckily, there are more affordable ways to stay insured. 

There’s more than one way to stay covered

If you lose job-based insurance, you can usually enter a Special Enrollment Period on the Affordable Care Act Marketplace, even if you were fired. 

You can typically enroll up to 60 days before or 60 days after losing your job-based coverage. Pricing varies significantly across providers and plans, but premium tax credits could help lower your monthly costs.

Marketplace coverage can start the first day of the month after your old insurance ends, assuming you enroll in time. Just make sure that you keep documentation of your coverage termination date so you can enter the Special Enrollment Period. 

But before you commit to the Marketplace, check whether either of these options can save you some money. 

• Your spouse’s insurance: If your spouse has employer-sponsored coverage, you usually have 30 days after losing eligibility for your old plan to request special enrollment. 
• Medicaid or CHIP: If you qualify for these programs, you can apply year-round. Income guidelines and other eligibility requirements apply. 

Keep in mind that you want to explore all of your options before jumping the gun. If you sign up for COBRA but decide you want a cheaper Marketplace plan, dropping COBRA doesn’t create a new enrollment period. But if you’re still within 60 days of losing your job-based coverage, you can use that original Special Enrollment Period to switch. After that window closes, you’ll need another qualifying event, Open Enrollment, or wait for your COBRA coverage to expire.

However, if you enroll in COBRA and land a new job, you can usually cancel when your new coverage begins without an early termination penalty.

Whatever you do, don’t let the deadline make the decision

Before choosing your coverage, compare more than just the premium. Look at deductibles, out-of-pocket maximums, prescription coverage, and provider networks. COBRA might be worth the extra expense if you don’t want to change doctors or you’re in the middle of treatment. 

If keeping the same doctors isn’t a priority, a Marketplace plan could be cheaper, especially if you qualify for premium tax credits. 

Just remember that COBRA and Marketplace deadlines don’t always follow the same calendar. Waiting on COBRA paperwork could cost you your Marketplace enrollment opportunity, so don’t wait until the last minute to start checking out your options. 

Make sure to get your coverage end date in writing, compare your options, and confirm when your replacement insurance begins. The only thing worse than losing your employer-based insurance is missing out on your chance to replace it.