This is What Happens to Your Health Insurance if You Lose Your Job

Many things make you feel like you're #adulting. Like when...


You level up your wine budget from two-buck-Chuck to the $12.99 bottle.

Your new couch came from IKEA instead of the dumpster behind the mall.

The best part of your week was getting to Costco before the crowd.


But nothing makes you feel more like an adult than having health insurance through your job. All you have to do is kick back, relax, and let your employer takes care of all the details while you revel in the glory of adulthood. 

That is, until, you lose your job. Suddenly, your employer isn't managing your insurance behind the scenes; it's something you need to manage yourself. And unless you got a BA in boring adult life stuff, you probably don't know the first thing about managing your health insurance. 

I got your back. Here are the answers to your burning questions about health insurance. 


How much does health insurance really cost?

Health insurance is more expensive than you think. When your employer offers an employer-sponsored health plan, they subsidize all or some of your premium. While you may pay for a portion of your health insurance through a payroll deduction, your employer is footing most of the bill. 

How much your employer subsidizes your insurance depends on your benefits package but, according to the Kaiser Family Foundation, in 2018 the average employer paid 82 percent of the premium for individual coverage and 71 percent for family coverage.  

Percentages smercentages- how much money does this add up to?

In 2018, the average employer health insurance policy for an individual cost $6,869, with employers paying $5,665 per year. For a family, the average policy cost $19,616 per year, and employers paid $13,927. 

Yea, that's a lot of money. Right now you're probably wondering…


What happens to my health insurance if I lose my job?

The good news is that if you lose your job, you don't automatically lose your health insurance. If your employer insures more than 20 full-time employees, then they are required to offer you COBRA coverage. COBRA is a federal law that requires your employer to continue your health care coverage for up to 18 months. 

Sweet! What’s the catch?

The catch is that, while your employer will keep you on your policy, it won't continue subsidizing your premium. When you're on COBRA, you're responsible for paying your entire premium, plus a 2% administrative fee.

Remember how we said the average cost for an individual employer-sponsored health care plan is $6,869 per year? On COBRA, you would pay $7,006 per year (the premium plus the administrative fee), which is $583 a month. 

That's a lot more than you're paying right now, especially when you don't have income.


Do I have to stay on COBRA or is there another (cheaper) way?

COBRA isn’t your only option if you lose your job. Alternatives to COBRA include:


Short term health insurance: If you think you'll find a new job quickly or don't need a robust plan, short term health insurance could fill your coverage gap at a reasonable price. Short term health insurance plans are low cost, and low coverage and most people can stay on them up to one year (with the option to extend). Note that not all states allow short term health insurance plans.

High deductible health plan (HDHP): HDHPs typically have a lower monthly premium, but as the name implies, high deductibles. That means you'll be paying the full cost of your medical expenses until you meet the deductible. These plans are best for people who don't think they'll need to use their insurance but want coverage in the event of an emergency.

The other advantage of an HDHP is that you can also set up a health savings account (HSA). The money you put into your HSA is pre-tax, which means you won't get taxed on it as income. You can use this money for qualified medical expenses, which is a good thing since you'll be paying for most of these in full. 

Insurance through your state’s insurance marketplace: Depending on your state and household income, you could qualify for financial help through your state's insurance marketplace. Even if open enrollment is closed, if you lose your job, you have 60 days to apply for marketplace coverage. Go to HealthCare.gov to find links to your state's insurance market. 

Health Shares: Health shares are faith-based programs where a group of people (called members) pool their money together through a monthly contribution. The program distributes contributions to members with qualifying medical expenses. You only access this pool when you have a medical expense. 

Health shares typically cost less than health insurance plans, but the tradeoff is that the coverage is limited. Because the programs are faith-based, they won't cover certain expenses for religious reasons. Also, some health shares require that you sign a set of ethical guidelines. 


How do I prepare to cover my own health insurance costs?

Figuring out how to pay for health insurance when you’re unemployed is probably not on the top of your to-do list, but doing a little work now can reduce financial stress later. Here are three ways to prepare:

1. Figure out how much COBRA coverage would cost you. If you don't already know how much your employer is subsidizing your health insurance, contact your HR department. If you do know what the subsidy is, use your payroll deduction to figure out the total cost of your plan. Don't forget to add the 2% administrative fee to your monthly premium. 

2. Research your alternatives. Spend time researching your options and how the costs compare to COBRA coverage. Beyond price, look at the type of coverage and if it's suitable for you and your family. Be sure to write down your findings (with links), so if you unexpectedly lose your job, you don't have to start at square one. Thank you, past self. 

3. Invest in private unemployment insurance. Unlike public unemployment insurance, which only covers about half of your employee wages, private unemployment insurance offers more realistic coverage for your lifestyle. Services like Otherhood provide monthly income, which is enough to cover your actual monthly expenses. 

Now that you have the health insurance game figured out, you can continue splurging on fancy wine and taking weekend trips to IKEA. Or, you can take a break from all the adulting and spend the day drinking box wine in the park instead. You decide. 


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