How Long am I Covered by Insurance After a Job Loss?

Suffering a job loss can have a devastating affect on the emotional and financial well-being of an employee. Many government programs are designed to help employees who have been separated from their jobs with unemployment assistance and benefit continuation. Unless an employee takes action to take advantage of these programs, insurance will stop immediately after a job loss.

COBRA

• The Consolidated Omnibus Budget and Reconciliation Act (COBRA) extends health insurance coverage for qualifying individuals for up to 18 months after a job loss, or longer if you have a disability. COBRA continuation coverage applies to employers with 20 or more employees. After an employee loses his job, the employer is required to contact the insurance plan administrator and notify them that the employee is no longer eligible for employer-sponsored benefits. The insurance company then sends the employee a notice of his rights to extend health insurance under the COBRA law. The employee has 60 days to elect COBRA coverage after a job loss.

HIPPA

• If an employee loses his health insurance because of a termination or job loss, reduction in work hours, separation or divorce, the Health Insurance Portability and Accountability Act (HIPAA) is a federal law that allows the worker to obtain individual health insurance through a private, individual insurance company regardless of health status or if any pre-existing conditions apply. To qualify, the employee must have had health insurance for at least 18 months without a significant break in coverage with their employer. Also, the employee cannot be eligible for other health insurance coverage, meaning he must have been denied health insurance elsewhere. Qualified individuals who take advantage of insurance portability can have their coverage continue indefinitely after a job loss.

Costs

• It is important to note the costs associated with COBRA and individual insurance. The premiums of COBRA coverage and individual insurance are expensive. According to Families USA, COBRA monthly premiums for families are $1,069 on average nationally. In 41 states, COBRA coverage consumes more than one-third of the worker's unemployment insurance benefits. The average premium for a single person in 2009 was $4,824 per year, while family premiums averaged $13,375, according to an article in USA Today.

Considerations

• If you suffer a job loss and need your insurance coverage to continue, you have a variety of options. You must take action to avoid paying high premiums or being ineligible for coverage for waiting too long to enroll. You can shop around for individual insurance if COBRA premiums are too high. You also have the option to obtain insurance coverage through a new employer for a substantially lower cost than other options.