Being suddenly unemployed often means you have a lot to sort out quickly. First, you might focus on how to budget without a steady paycheck and how to find a new job fast. But then it hits you—you might also lose your health insurance. This brings up a pressing question: “When does health insurance expire after leaving a job?”
First the bad news: The timeline for maintaining coverage can be short. On the plus side, there are plenty of options to choose from once your employer-sponsored health insurance plan is over. In this article, we'll explain what happens to health insurance when you quit or are let go, and we’ll outline the next steps you should take.
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So, when does health insurance expire after leaving a job?
When you leave or are let go from a job, your health insurance either expires on your last day of work or at the end of the month of your exit, says Andy Gillin, attorney and managing partner at GJEL Accident Attorneys. For example, if you quit on July 15th, your coverage usually continues until July 31st.
There isn't really a general rule or law specifying when an employer must end your health insurance coverage—it varies by company policy. So, when you quit or learn that you're being laid off, be sure to check with human resources or review your employment contract.
When it comes to health insurance, it generally doesn't matter whether you're being let go or quitting. In any case, the standard practice is to end coverage on your last day or at the end of the month. However, some companies might provide additional support for employees who are terminated, such as including an extended period of health insurance coverage in a severance package.
Can you keep health insurance after leaving a job?
Some government programs, such as the Consolidated Omnibus Budget Reconciliation Act (better known as COBRA), allow you to keep your job-based coverage for a certain amount of time. Besides COBRA, you may also be eligible for new plans under the Affordable Care Act, Medicaid, or Medicare, depending on your age, financial, medical, and personal circumstances.
COBRA
COBRA allows workers to maintain health insurance after leaving a job. Whether you quit or got laid off, you can still qualify for COBRA—though there may be exceptions if you were fired for gross misconduct, such as stealing, assault, harassment, or similar offenses.
The COBRA coverage lasts for 18 to 36 months—the exact amount of time varies depending on specific circumstances and the state you live in. According to the Department of Labor, you have 60 days to enroll in COBRA once your employer-sponsored health insurance ends.
“To sign up, you'll receive a COBRA election notice from your employer or insurance provider with instructions,” Gillin says.
The only downside is the potential costs to keep the coverage. “You’ll have to pay the entire premium, which can be expensive since the employer no longer contributes,” he says.
Affordable Care Act
The Affordable Care Act (ACA) offers a special enrollment period that usually starts 60 days before and ends 60 days after a qualifying life event such as losing existing health insurance coverage, and also changes in your income that affect which coverage you qualify for.
ACA offers a wide range of plans and prices, and, depending on your income and where you live, you may qualify for subsidized coverage and significantly lower the costs.
Medicaid and Medicare
Medicaid is a government-run program that provides free or low-cost health insurance for low income individuals or families. Eligibility rules vary between states, but generally, it's based on your income, house size, disability, and other family-related factors, such as being pregnant.
In some states, if your household income is 133% below the federal poverty level, you’re likely already qualified for Medicaid, even if you’re working. If you need more information, the Medicaid website has a list of sites and phones to call divided by state.
Similarly, if you're 65 or older, you qualify for Medicare, which is also a government-run health insurance. When you stop working or lose a job, and consequently lose your job-based coverage, you have an 8-month window to enroll on Medicare.
Parent's and spouse's plan
If you're married, you may be able to enroll in your spouse's health insurance, since losing your job is considered a qualifying life event in most cases. Be sure to check their plan's rules for enrollment criteria and other details.
If you're under 26 years old, one of your parents may be able to add you as a dependent on their health insurance plan. The rules for enrollment vary depending on what type of plan your parents have—whether it’s a job-based or a government program. It's important to note that insurance costs typically rise when a dependent is added.
Short-term health insurance
Short-term health insurance is a temporary solution for individuals during a gap in coverage. As the name implies, these plans only offer coverage for a limited amount of time—usually three months. They tend to be cheaper than longer-term options, but have a lot of limitations.
If you do pursue short-term health insurance, you may discover that you can be denied coverage or charged more based on pre-existing conditions or medical history. Those plans also aren't eligible for government subsidies and financial assistance programs.
FAQs
Can my former employer cancel my COBRA?
Yes, but not randomly. “Former employers can cancel COBRA coverage only if you fail to pay premiums or if the employer stops offering health insurance to any employees,” Gillin says. “As long as you stay on top of payments and the employer still offers a health plan, your coverage should continue.”
You can—and should—also cancel COBRA as soon as you no longer need the coverage. When you get a new job, your COBRA coverage doesn't end immediately—generally, it happens only when you sign up for your new employer-sponsored insurance.
Does health insurance end the day you quit?
It's possible. Some companies end health insurance coverage on the employees' last day of work, while others extend it to the end of the month. For example, if you quit on August 10, your coverage might continue until August 31.
Does my health insurance end the day I get fired?
It might end the day you get fired, but it can also end the last day of that month—depending on the company. Check with human resources or consult your employment contract to know what your company's policy is. Some employers offer extended coverage as part of a severance package for laid off employees.