I lost my job: keeping or replacing your health coverage

What happens to job-based coverage

When a job ends, or hours are cut below the level that qualifies for the employer's health plan, the coverage that came with the job usually ends too. When exactly it ends depends on the plan: some coverage stops on the last day of work, some at the end of that month. The employer's benefits office or the plan administrator can confirm the date, and it is worth getting it in writing, because the date coverage ends is the date many of the deadlines below count from.

Losing coverage this way is not the same as being without options. The US Department of Labor and HealthCare.gov describe three main routes for most people: continuing the same plan through COBRA, enrolling in a plan through the Health Insurance Marketplace, or, if household income is low enough, Medicaid or CHIP. Each one has different costs, rules and deadlines, and the right choice depends on your household, your income, your state and the care you expect to need.

This pathway explains how the routes work so that you can ask better questions. It cannot compare your actual options; only the official sources named at the end of this page, and the people they direct you to, can do that.

The three main routes

• COBRA continuation coverage. Keeps you on the same employer plan, with the same doctors and benefits, for a limited time. You generally pay the whole premium yourself.
• A Marketplace plan. An individual plan you choose on HealthCare.gov or your state's Marketplace. Depending on expected household income, you may qualify for a premium tax credit that lowers the monthly cost.
• Medicaid or CHIP. State programs for people with limited income, and for children. No enrollment window, and usually little or no cost to the enrollee.

Some people have a fourth option: joining a spouse's or parent's job-based plan. Losing other coverage gives special enrollment rights in group plans, which the Department of Labor says must allow at least 30 days to ask. If a family member has a plan through work, their benefits office can say whether that applies.

How COBRA works

COBRA is a federal law that lets some workers and their families keep their group health coverage for a limited time after certain events, including losing a job (for reasons other than gross misconduct) or having hours reduced. According to the Department of Labor, it generally applies to group health plans of private employers with 20 or more employees, and to state and local government employers. Some states have their own continuation laws that can reach smaller employers.

The Department of Labor's "An Employee's Guide to Health Benefits Under COBRA" sets out the main steps:

1. The employer notifies the plan that you have lost coverage, and the plan sends you an election notice explaining your COBRA rights.
2. You have at least 60 days to decide whether to elect COBRA, counted from the date of the notice or the date coverage would end, whichever is later.
3. If you elect it within that time and pay, coverage generally continues from the date it would otherwise have ended, so there is no gap.
4. The first premium payment is generally due within 45 days of electing coverage.

For a job loss or reduction in hours, COBRA coverage generally lasts up to 18 months. Some events, such as a disability or a second qualifying event, can extend it, and the guide explains when. The plan can charge up to 102 percent of the full cost of the coverage: the share the employer used to pay, plus your old share, plus a small administrative charge. HealthCare.gov notes that this is why COBRA usually costs more than what you paid while employed.

The main advantage of COBRA is continuity. If you are partway through treatment, have already met a deductible for the year, or depend on particular doctors, keeping the same plan can matter more than the monthly cost. Ask the plan whether amounts you have already paid toward this year's deductible carry over, because a new Marketplace plan would start counting from zero.

A Marketplace plan

HealthCare.gov treats losing job-based coverage as a qualifying life event. That usually gives you a Special Enrollment Period of 60 days after the coverage ends to choose a Marketplace plan, and you can often start the process up to 60 days before a known end date to avoid a gap. The enrollment periods pathway explains how these windows work.

The cost of a Marketplace plan depends heavily on expected household income for the year. HealthCare.gov explains that you estimate income for the whole year, not just the months you were working, and that unemployment compensation counts as income. Severance and other payments may also need to be included; the HealthCare.gov page "What's included as income" lists what counts.

Two points from HealthCare.gov are easy to miss:

• While you are enrolled in COBRA you cannot also get a premium tax credit for a Marketplace plan. If you decide to switch, the timing has to fit an enrollment period.
• If you are offered COBRA, you can still choose a Marketplace plan instead during the Special Enrollment Period that losing job-based coverage opens. You do not have to take COBRA first.

Medicaid and CHIP

If losing a job leaves your household with little income, Medicaid may be available for adults, and CHIP or Medicaid for children. Eligibility rules depend on the state. You can apply any time, either through your state Medicaid agency or by filling out a Marketplace application, which screens for Medicaid and CHIP and passes the information to the state. The Medicaid and CHIP pathway has more.

Comparing the routes

This table is a simplification. Exact premiums, networks and eligibility depend on your plan, state and income, and are only available from the plan, the Marketplace and the state Medicaid agency.

Deadlines that close options

The most common way to lose an option is to let a window close without deciding. Write down these dates as soon as you know them:

• The date your job-based coverage ends.
• The last day of your Marketplace Special Enrollment Period, usually 60 days after that.
• The last day to elect COBRA, as stated on your election notice.

HealthCare.gov also warns about one sequence in particular: if you enroll in COBRA and later decide to drop it outside Open Enrollment, ending it voluntarily does not count as a qualifying event, so you may have to wait until the next Open Enrollment to move to a Marketplace plan. COBRA ending at the end of its term, or because the former employer stops contributing to it, does count.

Questions to take to official help

For COBRA questions, the Department of Labor's Employee Benefits Security Administration answers questions from workers about their plan rights. For Marketplace and Medicaid questions, HealthCare.gov and its Navigators help with applications at no cost.

Next pathway: I'm turning 26: leaving a parent's health plan