How to Keep Your Insurance Benefits When You Quit or Get Fired From Your Job

If you leave your employer—whether voluntarily or involuntarily—you’ll need to take steps to stay covered by your insurer. When you have a chronic condition such as diabetes, heart disease, or cancer, it is crucial that you avoid any breaks in coverage that could trigger a preexisting-condition exclusion. This could make all the difference in your ability to continue using the same doctors, especially if you are in the middle of receiving important treatment. "In the flurry of excitement around changing jobs—especially if you’re being laid off—your mind may be on other things besides health insurance," says Helen Dumski, vice president and chief operating officer of the Diabetes Association of Greater Cleveland, who counsels patients on health insurance issues. "Many people don’t pay enough attention to the preexisting-condition exclusions. It’s very important to be on the lookout for that."

Here’s what to consider—before you leave your job—to make the best choices for you and your family.

Should you stay or go?
In some cases, the need to keep health-care coverage could outweigh career considerations. “I’ve had some patients remain in jobs even though they’ve had better offers because they don’t want to lose their health insurance,” says Otis Brawley, MD, chief medical officer for the American Cancer Society. "One [cancer] patient I know got a job working for the federal government, because federal health insurance doesn’t allow exclusions for preexisting conditions.” Be sure to look carefully at a new employer’s health plan for comparison, and weigh the importance of continuing treatment with the doctors and specialists you are seeing now.

Know your COBRA rights
Under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly referred to as COBRA, you and your family have the right to retain access to your employer-provided group health insurance for up to 18 months after you leave the job. That means you will get the same coverage and the same doctors you have now. You will have to pay for 100% of the coverage (rather than sharing the cost with your employer), but it is still usually cheaper than buying an equivalent policy on your own (though not necessarily as cheap as policies with inferior benefits). If you qualify for Social Security disability benefits, you and your family can get an additional 11 months of COBRA coverage, and if you have COBRA coverage through your spouse and you get a divorce, you and your children can get an additional 18 months. For more about your COBRA rights, visit this list of frequently asked questions assembled by the U.S. Department of Labor. Individual states also offer their own assortment of protections, so be sure to look into them.

Look into your spouse’s employer-sponsored group plan. If you’re married, joining your spouse’s health plan may be a cheaper option than COBRA. Under the Health Insurance Portability and Accountability Act of 1996, you have the right to enroll in your spouse’s health plan without having to wait until the next enrollment period, and without triggering a preexisting-condition exclusion. This is called “special enrollment.” If you elect to use COBRA instead, you have another opportunity to special enroll once you have exhausted the maximum period of COBRA coverage, or you can switch to your spouse’s policy during any regular open-enrollment period.

Consider alternate coverage for your children
One option that may save you money is to enroll yourself and your spouse in COBRA but get low-cost insurance for your children through government programs. Families that can’t afford to buy private health insurance for their children may be able to obtain coverage for them through the federal State Children’s Health Insurance Program (SCHIP), which covers about six million American children. Every state now offers coverage for uninsured children at little or no cost, even if the parents are working. Many states impose waiting periods of three months or more dating to when the child was last covered by private health insurance, however. To find out about income limits and eligibility for your state, visit the website for Insure Kids Now!, a national campaign from the U.S. Department of Health and Human Services.

Avoid a gap in insurance coverage of more than 62 days
If you have a preexisting condition for which you are currently receiving treatment, you’ll want to try to avoid a gap in coverage of more than 62 days, which will make your preexisting condition subject to an exclusion period when you get new insurance coverage. “If you have a long waiting period before beginning your next job, you can take the COBRA benefit until the other company picks you up, and there would be no issue of preexisting conditions because you would be a timely entrant into the new plan,” says Richard Imbrey, a certified financial planner and insurance agent in Knoxville, Tenn.