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- Harvard School of Public Health:
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- U.S. Department of Labor, Health Plans & Benefits:
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Continuing Your Coverage
While you may not be able to continue your benefits with your former employer, in most cases you have the right to continue health coverage under certain conditions. Health continuation rules enacted under COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) apply to dislocated workers and their families, even those whose work hours have been reduced, causing them to lose eligibility for health insurance. The full premium cost, however, is typically paid by the employee.
Who is Eligible
To be eligible for COBRA coverage, you must have been enrolled in your employer's health plan when you worked and the health plan must continue to be in effect for active employees.
Costs of Continuing Coverage
While most employers must extend your health benefits for 18 months under COBRA, the sticker price for insurance might be a shock. The typical cost is 102 percent of the premium, which is the actual cost to your employer, not the amount you have deducted from your pay. Paying double or more is not unheard of to keep the same coverage.
Tips for managing your health care needs:
- Try to get a better rate for yourself during the 60 days you are allotted to sign up for COBRA by calling your employer for more information.
- Under COBRA, if you are sick or injured within two months of losing your insurance benefits with your former employer, you have the right to pay premiums retroactively for those two months in order to remain insured.
- Check whether you can be covered under your spouse's plan.
- See if an association or club you belong to offers health insurance to its members.
- Look on your health plan provider's website to see if certain individual health plans offer more affordable coverage in your area. This information can be listed by state or by zip code.
Tips for managing your financial needs:
- Prepare a written budget to help clarify your cash-flow situation.
- Get rid of debt! Extra debt beyond the home mortgage and car payments can be a burden if you are laid off, especially high-interest credit card debt. Pay off as much debt as possible while you still have a job.
- Build a cash reserve. Ideally, you already have an emergency fund in place for just this sort of possibility, preferably with at least three to six months of cash to cover bare-bones expenses. If you don't have such a fund, or it's not well funded, put cash in it now while you can afford to.
- Cut expenses to free up cash to pay off that extra debt, feed the emergency fund and test run a bare-bones budget in the event you are laid off. Look at what expenses you could do without or reduce if you were to become unemployed, such as entertainment, clothing and meals out.
- Get a line of credit. Some financial advisors advocate getting a line of credit, say with your bank, while you still have a job. You won't get it once you lose your job. Don't touch the credit unless you absolutely need to, but it may come in handy while you're looking for work.