Access to Health Benefits After Job Loss

Another bad thing about losing a great job is losing your benefits, especially your health benefits. Medical debt is one of the leading causes of bankruptcy and losing your health insurance puts you at greater risk of problems with medical debt. It’s important that you remain insured, not just because of the risk of major medical bills, but also because a large gap in health insurance could be problematic when you try to get insured at a later date.

If you’re married and your spouse gets benefits through their employer, you may be able to get benefits through their employer. While it does mean your spouse’s paycheck will be a little smaller, that may be the most cost effective of all your available options.

Under COBRA, a Federal law, you’re typically able to keep your former employer’s plan, but you’ll have to pay up to 102% of the premium, which could be $500 or more each month or more for single health coverage. The cost is much higher for family coverage and may consume much of any unemployment benefits you receive.

You have about 60 days after leaving your employer to decide whether you want to continue coverage under COBRA. The time goes faster than you'd think so you'll have to decide quickly whether you want to exercise this option. You can continue coverage under COBRA for at least 18 months or 29 months if you’re disabled.

You may be able to get an individual health insurance policy through a company like Blue Cross Blue Shield or United Health Care, but you generally need to be in good health to get coverage at a good rate, or sometimes even at all. If you have any pre-existing conditions, which could be as simple as an allergy or a skin condition, you may have a hard time getting approved for individual health insurance. Policies that do allow for pre-existing conditions are often more expensive.

Some individual policies comes with high deductibles of $1,000 or more. That’s the amount you have to pay out of pocket before the health insurance plan covers anything. Generally, policies with lower deductibles have higher premiums and vise versa. A high deductible plan generally isn’t the best option for someone with high medical costs since you might have to pay thousands of dollars out of pocket before your insurance provider gives you any help.

As part of President Obama’s health care reform, every individual who’s been denied coverage because of a pre-existing condition must be allowed to have coverage through a Federal or state Pre-Existing Condition Insurance Plan. Unfortunately, you must have been uninsured for at least six months to qualify. This might be a good option if you have a pre-exiting condition and you’ve already been denied. But, if you’ve only recently lost your job, you’ll have to go several months without health coverage for this to be a good option. Rates are based on age and range from $110 to $471.

You may be able to get a small group guaranteed-issue health insurance policy, for example, if you decide to become self-employed. Some states allow groups of one, while others require at least two employees. If you live in one of the states that requires guaranteed-issue plans for sole proprietors, this is a good option. In other states, you'll need an additional employee, perhaps your spouse, to complete the group and become eligible for a small group plan.

Sources: HealthCare.gov, PCIP.gov, StateHealthFacts.org