When Does Health Insurance Expire After Leaving a Job? - GoodRx (2024)

Employment-based health insurance is the most common type of coverage in the U.S., so quitting a job is likely to affect your insurance status. It is a good idea to explore your insurance options before you quit your job.

If you don’t plan properly, you could risk a gap in coverage. You also could face high out-of-pocket costs for doctor visits, prescriptions, and emergency care during the time you don’t have insurance.

Proper planning could save you money and lead you to a health plan that is a good fit for you and your family. It’s important to know that you have options. If you intend to quit your job, keep reading to find out what you need to know beforehand to ensure that you and your family continue to have access to health insurance.

When you quit a job, what happens to your health insurance?

In most cases, employment-based health insurance ends when you quit your job. The status of your health insurance will depend on the type of coverage you had through your employer. For example, if your employer had 20 or more employees and offered group health insurance, you may be eligible to enroll in COBRA. COBRA (the Consolidated Omnibus Budget Reconciliation Act) is a federal law that protects workers and families from losing health coverage because of certain job and family changes. We’ll discuss the details of COBRA below.

Employment-based health insurance is the most common kind of coverage in the U.S. More than 54% of U.S. residents were covered by employment-based health insurance in 2021, according to the U.S. Census Bureau. That means these individuals had private health insurance provided by an employer or a union.

How long does health insurance last after quitting a job?

If you have job-based insurance, your coverage usually ends on your last day of work or at the end of that month. The exact date depends on your employee health plan. Sometimes, you will have extended coverage if you leave as a retiree.

It’s important to plan ahead for health insurance coverage before your last day at work.

If you’re eligible for COBRA, You may be able to continue coverage under your employee health plan for 18 months or longer.

7 health insurance options to consider if you quit your job

If you are quitting your job, you have many options for health insurance coverage. Your choices may include:

1. COBRA

This federal law allows you to extend your insurance up to 18 months (or longer in some states and under certain conditions) after quitting. COBRA can be expensive, because you have to pay your employer’s portion of your premium in addition to what you were already paying. Some states also allow your employer to charge a 2% administrative fee.

Typically, you can continue coverage under COBRA if you worked for a company with 20 or more employees that is not the federal government or a religious organization. Your spouse and children covered by the plan will also be eligible for COBRA continuation coverage, even if you do not sign up. Your former employer must give you at least 60 days from the date of your “election notice” (which alerts you to your options under COBRA) or from the date you would lose coverage, whichever is later, to enroll in COBRA.

2. Affordable Care Act (ACA)

The Affordable Care Act marketplace offers a special enrollment period for people who have a qualifying life event, such as the loss of job-based health insurance. The special enrollment period usually begins 60 days before you expect to lose coverage and ends 60 days after your insurance stops. Marketplace plans may be less costly than COBRA and offer more benefits, so shop around.

3. Medicare

If you are at least 65 or have a long-term disability, you may qualify for Medicare. Your special enrollment period lasts 8 months from the day you lose your insurance.

4. Medicaid

Did you have a low income while working? Did quitting your job reduce your family’s income? Depending on your income, you may qualify for low-cost health insurance under Medicaid. Medicaid is a state-administered program, so eligibility varies depending on where you live.

5. Partner’s plan

You may be able to join your spouse or partner's health insurance plan when your coverage stops. If your partner has employer-based health insurance, their plan will have its own rules for enrollment. For details, check with the insurance plan or the human resources contact at the company your partner works for.

6. Under 26

If you are under age 26 and lose your job-based health insurance, a parent may be able to add you to their insurance plan as a dependent. If your parent has a job-based plan, you may be required to wait until the annual open enrollment period. If your parent has an ACA marketplace plan, you may qualify for a special enrollment period. Some plans even allow coverage through the end of the year you turn 26.

7. Special plans

Short-term insurance with limited benefits can be a good solution while you’re between jobs. You also may consider alternative coverage options, such as fixed indemnity, accident, cost-sharing, and catastrophic insurance plans. If you are enrolled in college, you may have access to a campus-based health insurance plan.

How do I choose a new health insurance plan after leaving a job?

When selecting a new health plan, check the summary of benefits and coverage. You should consider the three Ds:

• Doctors: If you have regular providers you want to continue to see, make sure they are in your new plan’s network.

• Drugs: If you take medications, check the plan’s formulary to make sure those prescriptions are covered.

• Diagnostics: If there are tests you will need to manage a chronic condition, check to see that those services are included in your new plan.

How can I find out which insurance options cover my medications and pre-existing health conditions?

Under the ACA, insurance companies cannot discriminate against people with pre-existing conditions. Short-term insurance plans lasting less than a year are exempt from this requirement, and many do not cover pre-existing conditions.

You should consider your current and expected healthcare needs through the end of the current coverage year. As mentioned earlier, you can check a plan’s summary of benefits and coverage for information about:

• Deductibles

• Out-of-pocket limits

• Copayments for different services

• Covered medications

• Prescription copayments by medication tier

• Pricing for visiting in-network and out-of-network providers

What happens if I miss my ACA special enrollment period?

If you miss your ACA special enrollment period — which lasts from 60 days before to 60 days after a qualifying life event, such as leaving a job — you will have to wait until the annual open enrollment period to buy a marketplace plan.

ACA open enrollment begins on November 1 and ends on January 15, in most states. Where you live will determine the ACA open enrollment period. The Healthcare.gov website is the national platform for Affordable Care Act health insurance information and serves as the enrollment portal for people in 33 states. The District of Columbia and 17 states have their own marketplaces and their own deadlines for ACA enrollment.

If you miss your ACA special enrollment period, you may be able to sign up for one of the other insurance options mentioned above.

Is there a difference in my insurance options if I am fired, as opposed to quitting?

Whether you quit your job or get fired, there typically isn’t a difference in your insurance options when you leave a job. However, you may be denied COBRA if you are terminated for gross misconduct.

Your options may be slightly different if you retire from a job, because some employers and unions have special insurance coverage for retirees. Medicare offers some guidance on questions you should ask if you qualify for this kind of coverage, which could provide you with supplemental insurance that functions like a Medigap plan.

Is Obamacare cheaper than COBRA?

Obamacare is another name for the Affordable Care Act. Often, Affordable Care Act marketplace (Obamacare) plans cost less than COBRA.

Depending on your income, you may qualify for a premium subsidy that will decrease the monthly cost of your ACA health insurance plan, or you may opt for a premium tax credit on your annual tax return.

The 2021 American Rescue Plan made ACA coverage more accessible than ever. And the 2022 Inflation Reduction Act helps provide continued access to lower costs through 2025. In fact, the Centers for Medicare & Medicaid Services reports that four out of five people will be able to find a plan for $10 or less per month.

COBRA requires you to pay the full cost of your coverage. With COBRA coverage, you continue to make the contribution to the monthly premium you made while you were employed, and you also pay the amount your employer was contributing.

According to the Kaiser Family Foundation 2021 Employer Health Benefits Survey, the average annual premiums for employer-sponsored health insurance were $7,739 for an individual employee and $22,221 for family coverage. Those premiums would come to about $645 monthly for a single employee and $1,852 a month for a family — and you would be responsible for the full cost under COBRA.

Cost, however, may not be your only consideration. If you have met your deductible for the coverage year and have ongoing health issues, you may be better off paying for COBRA than switching to a new plan and having to pay another deductible. That way, you can keep your doctors and may pay very little out of pocket for your care, aside from your increased premium. Switching to another plan will reset all of your deductibles and may force you to find different providers, which may be detrimental to your physical and financial health.

Can I cancel COBRA mid-month?

COBRA is month-to-month coverage that can be canceled at any time. If you decide to cancel, it’s best to do so in writing. Once you stop the coverage, it cannot be reinstated.

It’s important to pay attention to timing if you intend to cancel COBRA. Make sure you are eligible to sign up for your next plan before your COBRA coverage ends. If you stop COBRA and want ACA or other group coverage, you usually won’t be able to buy a plan outside the open enrollment period. Your COBRA coverage needs to be exhausted for you to be eligible for an ACA special enrollment period.

Can my former employer cancel COBRA coverage?

COBRA coverage can be canceled if you miss a premium payment and don’t send the money before the 30-day grace period ends. You may or may not be able to reinstate your coverage in this instance. Your coverage also depends on that former employer continuing to offer group health insurance.

What happens to my COBRA coverage if I get a new job?

Your COBRA coverage typically ends if your new employer offers health insurance benefits. But getting a new job doesn’t automatically end your COBRA benefits. Typically, COBRA coverage ends when you sign up for insurance through your new job.

COBRA is designed to help you maintain insurance coverage during a transition period when you don’t have access to employer-sponsored health insurance. Any time you sign up for an employer’s health plan, it replaces your COBRA coverage. You will not have to pay the COBRA premiums or rely on your former employer’s plan for coverage if you get a new job.

You can be terminated from a COBRA plan if you reach the age to become eligible for Medicare while on COBRA.

What happens to my Obamacare if I get a new job?

Getting a new job may affect various aspects of your Obamacare (ACA) insurance, including:

• Subsidies: ACA subsidies are based on income limits. Increased income from your new job may affect your premium subsidy and raise the monthly cost of your health insurance. You should report income and job changes to the marketplace immediately.

• Eligibility: You may no longer be eligible for ACA insurance once you have a job-based health insurance offer. If your new job does not offer group health insurance, and you may remain eligible for an ACA plan.