Health Insurance for Laid Off Employees

In most cases, when you lose your job, you qualify for continuation of your health insurance through the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows you to keep the same health insurance for at least 18 months, sometimes longer, after you lose your insurance through your employer. Upon layoff, your employer may offer to continue your benefits or you can seek coverage on your own. When COBRA is not an option and you cannot afford private insurance, you may qualify for government-sponsored health insurance.

COBRA

• If your company has more than 20 employees and you participated in a group health insurance plan before your layoff, you are eligible for continuation of benefits under COBRA. Under most circumstances, COBRA allows for 18 months of coverage from the day you lost your health insurance. Your employer is required to notify your health plan administrator within 30 days of your loss of insurance. In turn, the plan administrator must notify you of your COBRA eligibility within 14 days. You will have 60 days to elect coverage and if you do, that coverage is retroactive back to the first day you lost the original coverage. The COBRA premiums may be significantly more expensive as your employer will likely stop its contribution towards the premiums.

Severance Agreements

• When you lose job, of no fault of your own, your employer may provide a severance package. The severance package could allow for continuation of salary or benefits after your last day of work. Depending on the company's policies, your length of service and other factors, you may be able to maintain your current health insurance for a specified period. Your employer will provide a formal severance agreement stating your last day of health insurance coverage. Read the agreement carefully and before signing, request a negotiation to extend your benefits.

Individual Insurance

• When you do not qualify for COBRA and you have not secured a new job with health insurance benefits, you can usually obtain private individual insurance. Most insurance carriers offer individual policies for you and your family. Plan types and options vary greatly depending on the level of coverage you need and the amount of out-of-pocket costs, such as deductibles, you are willing to pay. Consult a licensed insurance agent to help you sort out options and obtain a quote. You can also go directly to the insurance company websites to review plan options, obtain a quote and apply for coverage.

Government-Sponsored Programs

• Federal and state government offer several health insurance plan options if you are not eligible for COBRA, cannot afford private insurance or have been denied private health insurance. If you are over 65, you qualify for Medicare, a federally administered health insurance program. If you cannot afford private health insurance because of your layoff, you may qualify for state-sponsored medical assistance, also called Medicaid. Your children may qualify for the Children's Health Insurance Plan, also state-sponsored. Lastly, the Pre-existing Health Insurance Plan may be an option when you do not qualify for COBRA and cannot obtain affordable individual insurance because of a pre-existing health condition.