COBRA Coverage and Options During a Gap in Employment

Losing health insurance can be a stressful experience, especially when it comes unexpectedly. If you’ve been receiving benefits through your employer and are facing a gap until your new benefits begin, there are several options to consider.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It’s a federal law that gives you the right to continue your employer’s health insurance plan for a limited time after you lose your job for certain reasons, including termination or reduction of hours.

COBRA Coverage and Costs

Under COBRA, you can continue your current health insurance plan for up to 18 months. However, you’ll be responsible for paying the entire premium, which can be significantly higher than what you were paying before. COBRA premiums typically cost 102% of the plan’s cost, including the employer’s share.

Exploring Other Options

If the cost of COBRA is too high, you may want to consider other options.

ACA Marketplace Plans

You can purchase health insurance through the ACA Marketplace (also known as Healthcare.gov). These plans offer a range of coverage options and subsidies to help reduce costs. You may be eligible for premium tax credits or cost-sharing reductions. The Open Enrollment Period for 2023 coverage runs from November 1, 2022 to January 15, 2023.

Short-Term Health Insurance

Short-term health insurance plans provide temporary coverage for up to 364 days. They typically have lower premiums than ACA plans but may not cover all the same benefits. Short-term plans can be useful for bridging a gap in coverage, but it’s important to read the policy carefully and understand the limitations.

Negotiating with Your Employer

In some cases, you may be able to negotiate with your employer to continue your health insurance for a few extra months beyond your last day of employment. This is most likely to be successful if you have a strong relationship with your employer and a history of good performance.

Retroactive COBRA Coverage

COBRA coverage is retroactive for up to 60 days. This means that even if you don’t elect COBRA coverage right away, you can still go back and sign up within 60 days if you need coverage. However, you’ll be responsible for paying the premiums for the entire 60-day period, even if you didn’t use the coverage.

Making the Best Decision

The best option for you will depend on your individual circumstances. Consider your budget, coverage needs, and the length of the gap in coverage. If you’re unsure what to do, it’s recommended to contact a licensed insurance agent who can help you compare plans and make an informed decision.