You might wonder, "When you get fired, when does your insurance stop?" The answer is that it's up to your employer to determine how long you may continue employer-sponsored health insurance coverage. Therefore, you should ask your company's human resources representative this question.
Many factors determine the answer, including work and severance agreements, how often your employer pays the premium and frequency of health insurer eligibility updates. Lastly, continuation of health insurance is often available to employees upon termination, usually at an additional cost, per COBRA guidelines.
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Health Insurance Termination Date
Depending on the policy and premium payment arrangement between your company and the health plan, if fired, your active health insurance will end either the day of your termination or the last day of the month you were fired in. For example, if you were fired on March 10th, you may have coverage through March 31st. Often, coverage terminates at the end of the period covered by your last contribution.
Refer to your Summary Plan Description, a legal document about your health insurance that your company is required to provide you, to determine their termination policy. Always check with your human resources department to confirm this information.
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Provisions in Employment Contracts
Signed employment contracts may list provisions regarding health insurance coverage. The contract may stipulate a time frame for health insurance coverage. When fired, these contracts may be null and void, so check the contract to ensure it is valid upon firing. If offered a severance agreement, locate the insurance termination date in the agreement.
If you receive a termination of employment letter, note the health insurance termination date in this notification. If you are unclear about your options, contact the Human Resources department or a lawyer for assistance.
Getting COBRA Coverage After Termination
The Consolidated Omnibus Budget Reconciliation Act stipulates that employers with 20 or more employees must offer continuation of health insurance for at least 18 months after termination. The fired employee must complete enrollment and expect to pay the entire portion of the premium.
In rare cases, coverage through COBRA may extend beyond 18 months. In the event of firing due to "gross misconduct" such as illegal activity, the employer does not have to offer continuation of coverage, per COBRA guidelines.
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Bottom Line on Employer Coverage
The bottom line is simple – your company will inform you of your last day of health insurance coverage. If they do not, ask and request a Summary Plan Description. Chances are, you are eligible for continuation of coverage through COBRA.
Employers must notify their health plan administrator within 30 days of the loss of active employee insurance coverage. The fired employee has 60 days from the time they receive notification about continued coverage to elect coverage and another 45 days to pay the premium. All coverage is retroactive back to the last day of regular insurance coverage.
Considering Marketplace Coverage
While you can take advantage of COBRA, an alternative is to sign up for a Marketplace plan through HealthCare.gov. This can also be a good idea if your COBRA coverage expires or if you find the COBRA coverage too expensive. You'll get a 60-day window to choose a plan through the exchange. Depending on your income, you might qualify for financial assistance that reduces your monthly premiums.