WHAT HAPPENS TO MY HEALTH INSURANCE AFTER A LAYOFF?

One of the most immediate and stressful concerns after a layoff is health coverage. You likely have a family to cover, prescriptions to fill, or ongoing care to think about. The good news: losing your job does not mean losing your health coverage immediately — and you have options.

When Does Your Coverage End?

Employer-sponsored health insurance typically ends on either your last day of employment or the last day of the month in which your employment ended — depending on your employer's plan. Some plans continue coverage through the end of the month automatically.

Check your benefits documentation or ask HR for your exact coverage end date as soon as possible. This affects how urgently you need to make decisions about your next coverage option.

Option 1: COBRA Continuation Coverage

COBRA (the Consolidated Omnibus Budget Reconciliation Act) gives you the right to continue your exact same employer health plan for up to 18 months after leaving — but at your own expense.

Under your employer plan, your company was paying a portion of your premium. Under COBRA, you pay the full premium plus up to a 2% administrative fee. This can be expensive — often $500 to $2,000+ per month for a family — but it guarantees continuity of your exact same coverage, doctors, and prescriptions.

Key COBRA facts:

• Available to employees of companies with 20 or more employees
• Covers medical, dental, and vision if those were part of your employer plan
• Lasts up to 18 months (36 months in some circumstances)
• Premium is the full cost — what you paid plus what your employer paid
• You can drop COBRA anytime if you get new coverage

Option 2: ACA Marketplace Plans

Losing employer health coverage is a qualifying life event that triggers a Special Enrollment Period on the ACA marketplace (healthcare.gov). You have 60 days from losing coverage to enroll in a marketplace plan.

Marketplace plans can be significantly less expensive than COBRA — especially if your income has dropped. Premium subsidies (tax credits) are available based on your projected annual income, and losing a job often makes you eligible for substantial assistance.

Option 3: Spouse or Partner's Plan

If your spouse or domestic partner has employer-sponsored health insurance, losing your job is typically a qualifying life event that allows you to join their plan outside of open enrollment. Contact their HR department immediately — most plans require you to add dependents within 30 days of a qualifying event.

Option 4: Medicaid

If your income drops below certain thresholds after a layoff, you may qualify for Medicaid — free or very low-cost health coverage. Eligibility is based on current income, not prior income, so a job loss can make you eligible even if you previously earned too much. Check your state's Medicaid program through healthcare.gov.

What Does Your Severance Agreement Say About Health Benefits?

Your severance agreement should specify what happens to your health benefits. Look for:

• Last day of coverage — when employer-paid coverage ends
• COBRA subsidy — some employers agree to pay COBRA premiums for a period (1-6 months is common and worth negotiating for)
• Benefits continuation as severance — some agreements structure part of the severance as continued health benefit payments

A COBRA subsidy — even for just two or three months — can be worth thousands of dollars and is often easier for employers to agree to than additional cash. If your agreement doesn't include one, it's worth asking.

Key Takeaways

• Employer coverage typically ends on your last day or end of the month — confirm the exact date with HR
• COBRA lets you keep your exact plan for up to 18 months, but at full cost
• You have 60 days to elect COBRA — and it's retroactive if you need it
• ACA marketplace plans may be cheaper, especially if your income dropped
• Losing a job is a qualifying event — you can join a spouse's plan or enroll in the marketplace immediately
• A COBRA subsidy in your severance agreement is worth negotiating for