What Happens With My Health Insurance When I Quit My Job?
When you quit your job, you may be able to continue on your current health insurance. Depending on your employer and if you're enrolled in a group health plan, the Consolidated Omnibus Budget Reconciliation Act, or COBRA, may allow you to continue to be covered after you quit. You can also purchase a private, individual health insurance policy for yourself and your family, after leaving your job.
The termination date of your health insurance may be different from your job termination date. Depending on how your employer sets up the group health plan, you may have coverage through the end of the month you leave your job. Some employers process same-day terminations, meaning you lose coverage the day you leave your job. Others may allow you to keep coverage through the end of the month or billing period. Check with your human resources department, or review your summary plan description document, which may cover this information.
If you participate in a group health insurance plan at the time you quit your job, and your company employs over 20 people, you'll have the opportunity to continue on your plan. The COBRA Act allows you to extend your coverage for 18 months from the date your coverage would have ended. Your company is required to offer you coverage; however, they don't have to continue to subsidize any of the premium costs. Therefore, you may have to pay substantially more in monthly costs to stay on your current plan.
COBRA allows a conversion period, in which you can convert your group health insurance into an individual insurance plan within 31 days of termination of employment. You won't need any certification or evidence of insurability during this period, and the insurer can't deny you coverage for an individual policy. Though the individual policy may not offer the same level of benefits and may cost a great deal more than the group policy, you're guaranteed coverage. This is advantageous if you have pre-existing health conditions and would likely be denied individual coverage otherwise.
Individual and Short-Term Plans
If you don't have the option to continue coverage on COBRA, can't afford COBRA, or don't have the option for group health insurance immediately after quitting your job, you can get an individual or short-term health insurance policy. An individual policy provides full coverage and allows you to choose the type of plan you want and the deductible amount. You must go through an application process, where the insurer will approve you and set the policy rates -- or deny you. A short-term policy is good only for 1 to 12 months and can fill in the gap between jobs.