How to Get Health Insurance Between Jobs
It happens to plenty of us: you’ve left your old job to find something new. You’re happy to be searching for employment that’s a better fit, but there’s one problem that you can’t help but stress over: losing your insurance.
So many Americans rely on their employer for health insurance, and paying the cost of coverage on your own might seem like it’s as expensive as paying for your medical costs on your own. When you lose employment-funded health insurance, you might wonder: Do I really need insurance?
We hate to break it to you, but the answer is “definitely.” Without insurance, you’re putting yourself at risk of falling into major debt in the event of an unforeseen accident. Hospitalization is expensive, and you don’t want to find yourself on the wrong end of a pricey medical bill that you weren’t expecting. Luckily you have plenty of options—ones that can help you avoid those “wide awake at 3 a.m. worrying about medical worst-case scenarios” moments.
Check If You’re Eligible For COBRA Coverage
Before you stress about losing your health insurance from a previous employer, check to determine if COBRA coverage is an option for you.
COBRA is an acronym that stands for the Consolidated Omnibus Budget Reconciliation Act. (Say that even one time fast.) This law basically states that if you lose your employee health insurance—either from quitting, getting fired, or even reduced hours that disqualify you for full-time benefits—you may be eligible to continue paying premiums and receiving the same medical coverage for up to 18 months following loss of employment.
But there’s a catch: COBRA coverage does require you to pay a monthly cost that you may have avoided while employed. During your employment, your company may have covered most (if not all) of the cost of your health insurance premiums. But if you decide to use COBRA, you’ll have to pay the entire premium every month.
However, COBRA can still be a good coverage option in these circumstances:
- Lower cost – The premiums you will need to pay for COBRA coverage may be lower than the individual health insurance plan that you acquire because your company may have negotiated a lower rate. It might take a bit of extra research, but you could be saving good money by choosing COBRA instead of a new insurance plan.
- Better health insurance coverage – If you’re happy with the coverage you’ve been getting through your employer-funded health insurance, you may want to consider keeping it for as long as you can. Coverage varies quite a bit depending on what type of insurance plan you choose, so it’s imperative to check your benefits before making a switch.
This may be particularly worthwhile to individuals who need to see doctors frequently for certain health conditions.
- More time – For those who are currently searching for new employment, COBRA coverage may save you the trouble of looking for your own plan to fill the health insurance gap between jobs. If you start working somewhere new within the average 18-month window, you should still be covered by COBRA health insurance during that time (if you’re willing to pay the premiums).
Check Out Healthcare.gov or State-Run Marketplaces
As you may know, you are typically only permitted to sign up for an ACA-approved health plan through Healthcare.gov during Open Enrollment. If the timing is right and you’re leaving your job around the Open Enrollment period, you may be able to apply for coverage through Healthcare.gov or one of the state-operated marketplaces and not skip a beat. If not, it’s still a good idea to explore the option. In many cases, you may still qualify for a Special Enrollment period if you have lost your job-related health insurance within the last 60 days.
Health insurance plans through the Marketplace often come with a hefty price tag. However, when applying, you can also determine if you qualify for federal financial assistance, such as tax premium credits or cost sharing reductions.
Carefully Consider Alternatives
If neither of these options appeal to you, you’re not alone. Many individuals choose to explore alternatives due to the high cost associated with Marketplace plans. Medical cost sharing plans, short term health insurance, and high deductible plans are a few of the non-ACA-compliant options that are often explored. We will outline those options below.
Short Term Insurance
Depending on where you live, you may have the option to purchase a health insurance plan as short as three months (and up to a year). However, there is often more risk associated with short term health insurance, so it is important to fully understand what these individual plans will and will not cover.
These plans generally come with lower premiums. While a typical long term insurance plan can cost hundreds of dollars per month, many insurance companies offer a short term plan for a fraction of the monthly cost.
These health plans often come with restrictions. If you fall under one of these risk factors, you may not be eligible for this kind of coverage:
- Pregnancy
- Being 65 years or older
- Have a preexisting condition (such as diabetes, cancer, obesity, etc.)
These plans also often come with per-incident or annual caps. It’s important to understand what risk you are willing to take in exchange for the lower premium. Because of these restrictions and local regulations, some states have laws that prohibit the sale of short term health insurance plans.
Medical Cost Sharing Plans
Cost sharing plans, in theory, function just like their name implies; they spread individual medical costs across a larger group. These plans are often, but not always, offered by faith-based organizations. Program members pay a monthly fee, similar to insurance premiums, but often at a lower price point. These premiums are pooled together, and the group essentially shares each other’s medical costs as those arise. Some plans require an “incident fee” similar to a copay.
The devil is in the details with cost- sharing plans, so it’s important that you fully understand the terms. For example, some programs do not guarantee reimbursement and, like some short term insurance options, there may be per-incident, annual or lifetime caps in place. In some cases, the risk may outweigh the reward.
High Deductible Plans
High deductible or “catastrophic” health insurance may be a good option in particular situations. You can get a catastrophic plan through Healthcare.gov, but these are typically offered to younger adults, generally under the age of thirty, who are in good health. These plans typically come at an affordable premium, but as the name implies, a high deductible. However, many plans offer some basic health services that do not apply to the deductible, such as telehealth visits.
You may also find catastrophic plans off the Marketplace. It’s important to read the fine print for these plans as they often come with restrictive annual caps, which may defeat the purpose of getting a catastrophic plan to begin with.
Primary Care Membership Plans
Primary care memberships or concierge medical services have become more popular recently. In this situation, a primary care physician or medical practice will offer services generally for a flat monthly fee. This option will often include unlimited virtual doctor visits and lab work when necessary, generally with no copay required. Of course, this does not qualify as health insurance, so often individuals will choose to pair a primary care membership with a catastrophic or high deductible plan.
Cash Price Health Insurance
Cash Price Health Insurance is a new type of health insurance that’s beginning to gain traction. The “cash” (or the self-pay price) that doctors charge for services are typically the lowest price point. This type of plan replaces your traditional insurance card with a preloaded payment card. You pay for your treatment or prescription at the time of service to ensure you’re getting a good price. Then you upload your invoices into the app. This streamlined approach to insurance all but cuts out the middleman. The lower price points and administrative savings generally translate to lower premiums.
This type of insurance is not available currently in every state and generally has restrictions as well. So, it’s important to fully understand the terms.
Getting Covered During the Employment Gap
The most difficult part of losing employee health insurance is the fact that you’re suddenly left in the dark. Figuring out your own plan can be complicated, but we’re here to help. For more information on health insurance in general, keep reading our blog! And for more information on why we recommend not letting that health insurance lapse, check out our article: What Happens If You Don’t Have Health Insurance?. That should scare you straight.
Good luck with the job search, and stay safe!
Sources:
Sidecar. Frequently Asked Questions. https://sidecarhealth.com/faq
Health Insurance.com. Short Term Health Insurance by State. https://www.healthinsurance.org/short-term-health-insurance/
American Cancer Society. COBRA: Keeping Health Insurance After Leaving Your Job. https://www.cancer.org/treatment/finding-and-paying-for-treatment/understanding-health-insurance/health-insurance-laws/what-is-cobra.html
Consumer Reports. How Paying Your Doctor in Cash Could Save You Money. https://www.consumerreports.org/healthcare-costs/how-paying-your-doctor-in-cash-could-save-you-money/
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