5 Steps to Take If You’re Losing Health Insurance

Photo courtesy of Eden, Janine and Jim

When I lost my job back in November of 2013, one of the first things I had to figure out was how to get health insurance. And with our second child due in just a few weeks, I had to figure it out fast.

You might be losing your health insurance because you lost your job like me. Or maybe you’re having a child and you’re not planning on going back to work. Or maybe your employer decided to end the coverage, or went out of business.

Whatever the reason is, it can be pretty scary if you don’t know what to do. But the good news is that there are more options now than there used to be and if you take the right steps you can definitely find a plan that keeps you covered.

I learned a lot about how to navigate this situation while going through it myself, so today I want to share what I think are the 5 most important steps to take if you’re losing health insurance.

1. Ask your employer about COBRA coverage

COBRA is a Federal law that will let you keep your employer’s health insurance under certain circumstances, even if you’re no longer an employee.

Basically, if you lose your job or your hours are reduced to the point that you’re no longer covered by your employer’s plan, you may still be allowed to keep that coverage for up to 18 months (or up to 36 months in some cases).

This is a great benefit if only for the simple reason that it helps make sure you have access to some kind of coverage. But there are some downsides to the program as well:

• Generally, only companies with 20 or more employees are required to offer COBRA coverage. If you work for a smaller company, you may be out of luck.
• You may have to pay 100% of the premium, instead of your employer chipping in for part of the bill. So your premium could be significantly higher than it was when you were an employee. (Technically, you might have to pay 102% of the premium to account for administrative costs).
• Your premiums won’t be deducted from your paycheck, meaning you will no longer be getting a tax break for them. This is just like what can happen with your premiums on unpaid maternity leave.
• If your company stops offering health insurance altogether, or if it goes out of business, COBRA is no longer an option. You can only use it if the plan is still in existence.
• If you move out of state, the coverage in your previous state won’t be all that helpful.

So while COBRA is definitely an option worth checking out, there’s a good chance it may not end up being your best choice. Let’s look at some others.

FYI: you can find more information about COBRA here: FAQs about COBRA Continuation Health Coverage

2. Check out your spouse’s plan

If you’re married and your spouse is working, their employer’s plan might be a great option.

Losing your coverage should be a qualifying event that would allow you to enroll in their plan, so it’s definitely worth looking into what they offer. This is possibly the easiest, quickest and maybe even the cheapest option.

3. Apply for coverage through your state’s marketplace

Obamacare has ensured that everyone has access to health insurance no matter what. Even if the two options above are available to you, it’s probably worth at least applying through your state’s health insurance exchange just to see what they offer. Depending on your income and family size, you may even qualify for a subsidy that would make the insurance a little less expensive. (Here’s a calculator to help you figure it out.)

To find your state’s exchange, just start at Healthcare.gov and follow the links to your state’s site.

Having worked through the exchanges in both Massachusetts and Florida now, I can tell you that while it’s great to have them around, there are two big things you should keep in mind:

1. While all plans in every state have to adhere to certain minimum coverage requirements, the quality of the plans offered will still vary greatly from state to state. For example, the plans offered in Massachusetts were much more affordable with lower deductibles and lower out-of-pocket maximums than the plans offered here in Florida. Your state may be on the good or bad end of this spectrum.
2. Expect this process to take some time. It’s still a little bit of a mess, which really shouldn’t be a surprise given how big this new program is. It may take a few back-and-forth conversations with different people before everything gets sorted out.

4. Apply for coverage through CHIP

Our income is pretty low right now, since I’m in the process of starting my business, and Casey is only working part-time, so we ended up getting sent to Medicaid. Supposedly that’s meant to help you find cheaper coverage, but what we found here in Florida is that the coverage is pretty terrible for everyone except Nolan, our 7-month-old.

So the rest of us were left to find something else. Eventually my wife and I enrolled in a plan through the exchange and we got our 2-year-old enrolled in CHIP, which is essentially a special Medicaid program for kids.

For us, CHIP is great because it gives Aiden all the coverage he needs and the premium is only $15 per month. The only problem is that we didn’t apply for CHIP until we found out how bad the regular Medicaid coverage was, and that delay left us with 2 months during which Aiden wasn’t actually covered by any insurance at all.

That mistake didn’t end up costing us much, but it certainly could have. So just to be safe, if you have kids and you’re applying through your state’s exchange, I would think about applying for CHIP at the same time. You might not end up qualifying for it or even needing it, but it’s better to make sure the application is in on time in case you do.

5. Work with an independent health insurance agent

An independent health insurance agent can help you figure out what insurance options you have outside of any employer and outside of the exchange.

Just google “independent health insurance agent” for your area, and call up a few of them and ask them to send you some options. Different agents might contract with different plans, which is why it’s a good idea to call a few. You may also just find one to be more helpful than the others.

This isn’t likely to be the cheapest option available to you, but it’s a good way to make sure you’ve got all your bases covered and understand all of your options.

Final thoughts

With all of these options, it’s a good idea to act quickly. The sooner you get started, the sooner you can start looking over your options, and the less chance you have of missing out on an opportunity.

Also, each of these options can take some time, which means that there may be a short period of time where your coverage isn’t finalized and any health care expenses would have to come out-of-pocket. Your coverage will almost certainly apply retroactively to reimburse your for at least some of those expenses, but this is one reason why a good emergency can be a big help.

Finally, understanding your options is only the first part. Figuring out which plan you actually want to choose can be tricky, so if you’d like some help you can check out this post I wrote on the 6 most important factors we considered when choosing our own health insurance plan.

Losing health insurance is never fun, but hopefully this gives you some good ideas about how to go about getting it back. Good luck!