If you’ve lost health insurance coverage due to a qualifying event such as losing a job or leaving a job, you have a few options to remain insured. Some individuals prefer to continue their employer sponsored coverage through COBRA, others prefer to purchase insurance directly from the private marketplace. For those eligible for premium subsidies, Covered California may also be a good option. Regardless of which option is chosen, an employee has 60 days from the former health plan end date to apply for coverage through COBRA, Covered California, or the Private Exchange.
Here are the different options for remaining insured after a change in employment status.
COBRA (also known as the Consolidated Omnibus Budget Reconciliation Act of 1985 states that employers who offer employees group coverage must give employees the opportunity to continue that coverage in the event that the employee is laid off or there is a change in his or her employment status. However, the employee will likely have to pay the full cost of the premium. Therefore, if you like your health plan and can afford to pay the monthly premium, you can choose to continue your health insurance plan by enrolling in COBRA.
If COBRA is too expensive, you can decline coverage. If you choose to decline coverage, your options are to enroll in the private marketplace or Covered California — or to be uninsured. We don’t recommend choosing to remain uninsured because you could face tax penalties under the Covered California insurance guidelines and you wouldn’t be protected in the event of a medical emergency.
If you choose to decline COBRA, you can purchase health insurance through Covered California since termination of employment is a qualification for special enrollment. We recommend checking to see whether you’re eligible for a premium subsidy which could help reduce the cost of your monthly premium. Premium subsidies are typically available if your income is between 100%-400% of the federal poverty level. You can see if you qualify here.
PRIVATE EXCHANGE/DIRECTLY FROM INSURER
If you decline COBRA and don’t want to enroll in Covered California, you can purchase a health plan directly through the insurer. Here are the top 10 insurance companies in California.
*It is important to note that an employee cannot enroll in a Private Plan or a Covered California health plan and then later decide to enroll in COBRA.
What should you consider when deciding whether to enroll in COBRA, Covered California, or go directly through the insurer after termination or a change in employment status?
- Premium, Copay, and Deductible costs
- Provider Networks
- Current Health Status
- Tax Credit Eligibility
If you’re unsure of which option is right for you, we recommend refreshing up on how to select a health insurance plan here. And to avoid a tax penalty for being uninsured, make sure to enroll in coverage within that 60 day qualifying period after your employer sponsored coverage ends.
Still have questions on which continuation plan is right for you? Give us a call at 619-222-0119.