What to do about your Health Insurance when you get Laid off

If you have been laid off and lost your job, you don’t have to lose your health insurance coverage anymore. You could be eligible for a continuation of your health insurance benefits. And this benefits those with any pre-existing conditions the most, because they will not lose coverage even on those conditions.

A federal law known as COBRA (short for the Consolidated Omnibus Budget Reconciliation Act of 1985) provides a bridge between health insurance plans for qualified workers, their spouses, and their dependent children when their employer-sponsored health insurance has been cut off.

Under COBRA, if you resign from a job or are terminated for any reason, other than “gross misconduct,” you are guaranteed the right to continue your former employer’s group plan for individual or family health insurance for up to 18 months at your own expense. In most cases, your spouse and dependent children are also eligible for COBRA coverage, sometimes for as long as three years.

You must actually be covered under an employer health plan to be eligible for COBRA. If your employer has more than 20 workers but doesn’t offer health coverage, or offers coverage only to certain groups of employees and you’re not one of them, you won’t be eligible for COBRA even if one of the qualifying events occurs – nor will your spouse or children be eligible.

If you have no pre-existing conditions and decide against COBRA, you can still consider buying individual insurance or even a short-term major medical policy to tide you over until you land a new job with health benefits. COBRA is very expensive and is probably much more than private insurance for those without preexisting injuries.

The coverage you receive under COBRA must be identical to the coverage you had before. If your former employer changes its health insurance plan for its current employees, you are entitled to receive benefits under the new plan, although the benefits may change. If your employer switches plans, you won’t be able to keep the old plan.

Both you and your former employer must follow proper procedure to initiate COBRA, or else you could forfeit your rights to coverage. The employer must notify the health plan administrator within 30 days after an employee’s “qualifying event” death, job termination, reduced hours of employment, or eligibility for Medicare.

Once notified, the plan administrator then has 14 days to alert you about your right to elect COBRA.