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Re-thinking Benefits when You're Laid Off

Health and financial benefits decisions when you're downsized

When you've been laid off or downsized, your health needs keep going strong. But your health benefits don't. Do you know how to cover your or your family's health without an employer plan? Here's what you need to think about.

Learn when your coverage actually ends

Just because you lose your job doesn't mean you lose your benefits right away. If you're laid off, learn when your employee health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
ends. If you get a severance package, then ask if your health benefits will continue during the severance period. Or see if you can negotiate this.

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Weigh your coverage options

When you lose your employer health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
, you have some options:

  • COBRA
  • Individual health insurance
  • MedicaidMedicaid
    A State government program that provides health care insurance for low income people, including fami... more
  • State Children's Health Insurance Program

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Continue your coverage with COBRA

You may be able to keep up your coverage with COBRA. It applies to any worker who is "displaced." That could mean someone who:

  • Is laid off, and unlikely to return to the job
  • Is part of a plant or company closing
  • Is self-employed, then unemployed, due to a natural disaster
  • Is self-employed, then unemployed because of economic conditions
  • Is a displaced homemaker who is dependent on another person's income
  • Loses hours at work, which causes them to lose their eligibility for health insurance

To get COBRA coverage, you must have been enrolled in your employer's health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
when you worked. And the health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
must still be in effect for active employees. If you are eligible, you should get a COBRA notice from your employer. Read this carefully. To keep up COBRA, you must sign up within a certain time. It's typically 60 days from your eligibility date. And with most employers, you can extend your health benefits for 18 months.

Now the bad news: COBRA is costly. It's usually around double of the premium of your original plan. That includes the actual cost to your employer, not just the amount you have taken from your pay. Still, it's health benefits. And you can shop around for affordable options in the meantime - while keeping your health covered.

To find out more about COBRA, visit the U.S. Department of Labor's website.

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Get your own individual coverage

Here's the beauty of an individual health planhealth plan
A health plan that you buy or that is provided by your employer. It pays for health care services. I... more
: You can build it to look just like what you had with your employer plan. Or you can choose a lower level of benefits, for less costs. Depending on your situation, individual health benefits may be more affordable than COBRA.

Your health history can impact your eligibility for the plan, as well as the cost. So depending on where you live, you may need to fill out a health questionnaire. This is called medical underwriting.

So take the time to research individual health plans in your area. You can visit eHealthInsurance.com to compare plans. Or get a quote for an individual insurance plan here.

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Look into free or low-cost programs

You may be able to get free or low-cost health insurance through MedicaidMedicaid
A State government program that provides health care insurance for low income people, including fami... more
. It depends on your financial situation. MedicaidMedicaid
A State government program that provides health care insurance for low income people, including fami... more
is the main program for uninsured people in the United States who need health insurance and can't afford it on their own. Each state has its own MedicaidMedicaid
A State government program that provides health care insurance for low income people, including fami... more
program - all with different benefits and eligibility requirements.

You may also be able to cover your child (up until age 18) throught the State Children's Health Insurance Program (SCHIP). To find your state's program, go here. As with MedicaidMedicaid
A State government program that provides health care insurance for low income people, including fami... more
, it also depends on your financial situation.

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Manage your health needs during a job loss

A lay off may be inevitable. But there are things you can do to better protect your health care needs.

  • Try to get a better rate for yourself. You have 60 days to sign up for COBRA. Call your employer to get more information.
  • See if you can be covered under your spouse's plan.
  • If you belong to an association or club, check if it offers health insurance to its members. If you're not a member, ask about joining.

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Budgeting for a layoff

During a job loss, your helath plan takes a hit, and so can your finances. Prepare ahead. A few tips:

  • Prepare a written budget to see where your cash is flowing in and out.
  • Get rid of debt. Especially high-interest credit card debt.
  • Pay off as much as possible while you still have a job.
  • Build a cash reserve. Keep at least three to six months of cash to cover everyday expenses. If  you don't have savings, save now. While you can still afford to.
  • Cut out unnecessary expenses. Look at what expenses you could do without. Or what you'd cut out if you didn't have a job. Then take that extra money, and store it in your savings.

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