How to Get Health Insurance If You Quit Your Job

Health Insurance If you Quit Your Job

Are you thinking about quitting your job but worry you can’t quit because you’d lose health insurance? Or maybe you’ve just quit your job and are now panicked because you got a COBRA statement and it’s insanely expensive?

The good news is I’ve been there and done that and am here to tell you all about it. The better news is you can get health insurance coverage too. 

If you quit your job for any reason you have at least two and maybe three options for health insurance coverage.  I’ll lay them out here along with additional details I have from personal experience. (For more on my personal experience, here are 9 Lessons I Learned from Quitting My Job to Take a Sabbatical. And if you are really unsure if you want to quit, here’s a good one about Quitting Your Job without a Plan.)

1. Use COBRA Health Insurance After You Quit

If you quit your job, your health insurance typically runs through the end of the month you are employed. (Check with your employer as some companies won’t give you insurance through the rest of the month if you quit during the first week.)  Regardless, once you give notice, you’ll be notified when your health insurance ends. A few weeks after your last day you’ll receive a COBRA statement. 

A COBRA statement tells you that you are entitled under law the opportunity to continue to buy health insurance from your former employer for a period of up to 18 months following the date your health insurance ends. 

Let me warn you about that COBRA statement though. This statement is long and the prices are shocking. For my family of four, continuing health insurance under COBRA would have cost over $2500/month.  

Now, this insanely high cost may be worth it for you if you are towards the end of the calendar year AND  you have a high deductible insurance plan AND you have already hit your deductible. Or it may be worth it to you for the possibly superior coverage it provides.  Regardless, you’ll have to spend some time running the calculations to figure out if COBRA is best for you. 

(Note, your COBRA statement will also notify you of other insurance you might be entitled to – including dental and vision.)

2. Get Insurance Coverage from Your Spouse or Parents After You Quit

If you are married and your spouse has access to health insurance through his/her employment, you can be added to their health insurance or sign up for their plan anew.  This is regardless of the time of year.  Some might tell you you have to wait until open enrollment period, but this is simply not true.  Your spouse needs to contact their HR department and tell them that they have a qualifying event that entitles them to add you to their plan.  

(The qualifying event is that you lost health coverage. It doesn’t matter how you lost health coverage (i.e. quitting your job); all that matters is that you had a qualifying event.)  

The price for getting coverage through your spouse’s employer will vary greatly. Some employers have a discounted plan for family members, others will pass along to you the full price they pay.  

Alternatively, if you are under 26 (even if you’re married) and quit your job and your parents have health insurance, you can get on their plan. Your parents would follow the same steps your spouse would follow to add you under their plan. 

3. Sign Up For ObamaCare Under the Affordable Care Act

If you don’t want to pay for COBRA and you can’t or don’t want to be on your spouse’s or parent’s plan, then you can obtain insurance under the Affordable Care Act.  This is the path I ultimately chose.

Normally you can only sign up for ObamaCare during the Open Enrollment Period. However, if you have a special qualifying event, you can sign up at any time. One of these qualifying events is loss of health coverage – which includes when you lose health insurance because you quit your job.  

To determine where and how to sign up for the ACA, visit the Federal government’s official website – HealthCare.gov.  Some state’s (including mine) have a marketplace for insurance. HealthCare.gov will tell you exactly where to go to determine how to sign up.

I live in a pretty progressive state, and so I was able to find a plan through my state’s health care marketplace. But I will say, the process wasn’t exactly easy.  It took submission (and resubmission) of my COBRA letter to be qualified to shop in the marketplace.  There were quite a few forms I had to fill out and electronically submit. I even had to call and talk to the staff at my state’s offices twice (they were extremely helpful both times).  

And then once I was in the marketplace and eligible to shop (because I lost health care coverage), it took awhile to sort through plans.  Several plans looked identical on paper – they all had the same deductibles for every single item on the plan summary.  So I had to call the company offering the insurance to understand the difference (it came down to which specific doctors were considered in-network.) 

Cost of Health Insurance Through ACA Marketplace

But we ultimately settled on a high-deductible plan that was HSA eligible and included our kids’ pediatrician as in-network. The plan is not as good as the plan I had from my job – which I could have continued through COBRA. But the ACA plan is $835/month for our family of 4- a savings of nearly $2,000/month from COBRA!

We’ve used the plan several times now and interestingly, the actual rates we pay to a doctor are cheaper than the COBRA plan (Blue Cross Blue Shield).  I was paying close to $500/month for family coverage through my employer, so while $835/month is still ridiculously expensive, it’s not as much of a difference from what I paid my employer as I thought it might be. 

Under Any Option – Ensure You Enroll Within 60 Days

Any of the options above are good options for how to get health insurance after you quit your job. But, the most important thing to remember is that you must enroll within 60 days of losing your health insurance coverage. Since the processes are not easy, make sure you start early. It took me a full two weeks to get everything finalized; and would have easily taken a month if I didn’t review everything properly. If you miss your 60 day window for enrollment, then you are out of luck. 

This is an update to the post on how to get health insurance during a sabbatical, so check out that post too if you are thinking of taking a sabbatical. 

The Bottom Line

Can you get health insurance if you quit your job? Absolutely.  I’ve walked you through 3 ways of how to get health insurance after you quit your job above – 1) COBRA, 2) Your Spouse’s or Parent’s Plan and 3) through Obamacare (the Affordable Care Act).  Each option has its pros and cons, but thankfully, you no longer have to stay at a job just to have the opportunity to buy health insurance. 

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