Handling Health Insurance When you are In Between Jobs

January 26, 2018

Changing jobs may be good for your finances, but it can hurt your health insurance. If your current employer provided your insurance, you’ll likely find yourself without coverage as soon as you leave or shortly thereafter. Because the Affordable Care Act requires that you have insurance, you have to make some quick decisions while you are in between employers.

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Look at Your Old Insurance

First, consult with your HR Department or insurance company about your current insurance. You may have coverage longer than you think. Some policies end immediately upon termination. Others last through the month the premiums were paid. Find out the real date that your coverage ceases so that you can make the right decision.

Inquire About COBRA

COBRA or the Consolidated Omnibus Budget Reconciliation Act provides you with a continuation of your current coverage despite your change in employment. If your employer has at least 20 people working for him, he must allow this option – it’s the law.

Before you opt for this choice, find out all of the details. You’ll have to pay the full amount of the insurance coverage. When you worked for your employer, he likely footed a portion of the bill. Keep that in mind as you determine the premiums you’ll pay. It’s not unusual to pay 110% of the premium amount in order to account for the administration costs of keeping the policy.

For example, if your premiums were $500 per month, but you only paid $250 while you were on the job, you’ll now pay $550 per month. Make sure you can afford the premiums by their due date each month. If you miss a due date, your insurance is canceled with no chance for renewal. If you do secure a COBRA policy, it satisfies the Affordable Care Act requirements. You can keep the policy until it expires or until your insurance at your new job begins.

Get Insurance on the Health Exchange

The Health Exchange policies work much like an employer-sponsored policy in that you can only apply during open enrollment. This usually falls just before or during the month of January. For 2018, open enrollment was from November 1st to December 15th of 2017. If you missed those dates, you’ll have to wait for next year, unless you are in between jobs. Leaving your current job is considered a qualifying event.

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A qualifying event allows you an additional 60 days from the qualifying event’s effective date to secure insurance on the Health Exchange. Don’t delay if you do want insurance through the marketplace. Start shopping early and make your decision well before your 60-day mark. This way you have the policy in place when your time is up. If you miss the 60-day window, you must wait until the next open enrollment to secure insurance in the marketplace.

Secure Temporary Insurance

Temporary insurance isn’t recommended, as it’s more of an ‘emergency policy.’ It won’t cover any routine medical care or even standard reasons to see the doctor. It only covers emergencies or traumas occurring unexpectedly. People often secure this insurance to cover against catastrophic events, such as a heart attack or serious car accident. Its coverage is usually much less than a standard policy. In fact, it doesn’t count in the eyes of the Affordable Care Act, which means you’ll be in violation of the law and pay a penalty as a result.

Every situation is unique. No two people will have the same answer when they are in between jobs. Luckily today employers have to give you insurance under their policy within 90 days of starting the job. This gives you less time you have to worry about paying inflated COBRA rates or taking a gamble with temporary insurance.

Go over all of your options and make sure you have adequate coverage under the Affordable Care Act. If you don’t, discuss the penalty with your tax advisor to see just how much it will affect you. It’s not just that you won’t have insurance coverage, but the fact that it will cost you more money in the end. It makes sense to pay for a qualifying policy even if it’s only for a few months. This way you have insurance and don’t pay needless penalties due to your change in jobs.

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