Health Insurance Articles
How To Avoid A Lapse In Coverage After A Layoff
2011-03-28
A layoff is a traumatic event which often induces disbelief and denial in the individual being laid off. If you're part of a layoff, health insurance and the possibility of a lapse in coverage should be an immediate concern: Failure to act quickly can result in a lapse in coverage and difficulty in obtaining health insurance in the future. It's therefore to come to terms with what is happening to you quickly.
To ensure continued health insurance in the event of a layoff, ensure you read the health insurance section of any separation package provided by your employer very carefully. Some companies provide a period of continued health insurance at the corporate subsidized rate, requiring the insured to pay only the contributions that were previously deducted from their paycheck. If available, this will usually be the easiest way of maintaining health insurance for most people, at least in the short to medium term, but it is important to ensure that premiums are paid on time and to know when coverage will end to avoid any lapse in coverage. If you company does not provide any continued subsidized coverage, the exit package will date that your existing coverage ends.
If you have a spouse or partner whose employer provides health insurance which covers employees and their families, you should evaluate the cost and coverage provided and switch where it makes sense. Loss of employment is a qualifying life event which means you do not have to wait for the open enrollment window to enroll and doing so ensures continuing coverage without the stress of needing to ensure you pay premiums on time.
If neither of the above options are open to you, your former employer is generally required to offer continued health insurance under COBRA legislation, which provides access to insurance at the corporate group rate for up to 18 months. Insurance provided under COBRA is not subsidized in any way and premiums will likely relatively expensive. Again, it's important to pay premiums on time and to know when coverage runs out.
The option of last resort for maintaining health insurance in the event of a layoff is to buy an individual health insurance policy to avoid a lapse in coverage. Typically, this is the most expensive option, but an important one if you have an on-going health condition as you will likely not be able to buy individual coverage once coverage lapses.
Finally, if you're part of a layoff, health insurance concerns should be dealt with quickly; however, do not panic and consider all options carefully, then act in a timely fashion to ensure you do not have any lapse in coverage.
