Job Loss and Employee Benefits

After getting fired, the first thing that usually comes to mind is when you’ll receive your final paycheck.  You’d also be wise to consider budgeting out your expenses after the loss of income.  But I’ve got more bad news.  After getting canned, you’re most likely on borrowed time with your employer-provided health insurance as well as your employee benefits.

Coverage End Date

Every company has their own rules for how employer-provided health insurance coverage is administered, but generally speaking, your coverage will typically end:

• At the end of your current paid coverage period following your termination date
• After a predetermined set of time as outlined in an employment agreement

Typical Scenario: End of the month following the termination date

After working in HR for several companies, I can say it’s fairly common for companies to let your medical and dental coverage continue until the end of the month following your termination date. For example, if you lose your job on Jun 5, you’re likely to have coverage through the rest of June.   Then starting on July 1st, you’ll no longer have health insurance unless you elect to continue coverage or get a new plan.

Special Case: Some defined period

It’s not uncommon for executives and highly sought after employees to have contracts that spell out how their benefits might continue in the event of employee termination. These are often spelled out in severance agreements.
A severance agreement can consist of any terms that the employer and employee agree to, but it’s fairly common that an employer might provide six months of ongoing coverage following a severance date. This coverage might be completely company paid or the company may continue to pay just the employer portion leaving the former employee responsible for the remaining amount.

So now what?

What Are My Options?

At a high level, your options are to continue coverage under your employer’s COBRA plan or get coverage through the governments Health Insurance Marketplace.  You can also get a private policy through any health insurance provider you choose.  Make sure you pay attention to eligibility dates.   You’ll typically want to secure coverage within 60 days of losing it, or you may have trouble with a coverage gap.

COBRA Coverage

By law, employers need to send paperwork to the employee notifying them of their loss of coverage and their eligibility to participate in COBRA coverage.  COBRA, which stands for consolidated omnibus reconciliation act, is a set of laws that allow your coverage to continue for up to two years.   Typically COBRA coverage is expensive.  COBRA coverage is just the continuation of your existing plan without the employer paying their portion so you’ll be paying the full cost and also may pay up to an additional 2% for the cost of your employer administering COBRA.

Health Insurance Marketplace

The government provided Health Insurance Marketplace is an option worth exploring.    At certain income levels, you may be eligible for subsidized pricing.

Private Health Insurance

It doesn’t hurt to consider going directly to the health insurance companies.  They likely have a wide variety of options choose from with a variety of premium options.