I Was Fired. What Happens to My Health Benefits?

Getting fired often comes as a shock that leaves your head spinning. Once the dust settles, questions will rise to the surface. A common one is, “What happens to my health benefits now that I have been fired?”

“Your first step should be to assess your health care needs,” says Nate Randall, founder and president of Ursa Major Consulting and host of the podcast Illuminate HR. “The employee benefits staff is required to inform you about your options,” says Randall. He explains that it’s best to have these choices illustrated in writing or an in-person meeting.

Randall, who has created company benefits programs and advised the HR industry for decades, recommends taking full advantage of your company’s benefits.

While these benefits will vary from company to company, they might include access to employee assistance programs, confidential workplace services providing telephone access to financial counseling, legal advice, help with health and caregiving challenges, or any other resources that might help you weather the fallout from losing a job.

He notes that most HR departments want to take the sting out of being fired and help see you through this difficult period.

Check with HR about the arrangement between your company and health care provider. Find out whether your coverage ends the day you’re fired or on the last day of that month.

As long as you weren’t terminated for something like “gross misconduct” (for which each state has their own definition), you should retain the right to keep your insurance. Your chosen method by which you keep your coverage will depend on your employer, the state you live in and your finances.

What is COBRA?

COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal program that allows employees to keep employer-based insurance coverage for themselves and dependents for up to 18 months (and in some cases, longer). If you were insured as a part-time employee, you’re also entitled to COBRA. There are some important things to know:

• COBRA only applies to private-sector companies with at least 20 employees, or to state and local government employers. The downside of COBRA coverage is that it’s more expensive because (former) employers no longer cover any of the costs. The upside is that you’re still covered under a group plan, which costs less than an individual policy.
• Within two weeks of termination you should receive an “election” notice from the insurance provider, and then have 60 days to decide on whether to continue coverage. You’ll be required to make an initial premium payment within 45 days. You’re out of luck if you don’t pay your premium on time — your COBRA coverage will be automatically canceled.
• The coverage is retroactive, so if you happen to get injured or sick before COBRA kicks in, you’re still covered. As long as your spouse and dependents were covered when you were employed, they can continue receiving benefits through your employer’s plan, even if you elect not to take advantage of COBRA.
• You’re not locked in — you can cancel at any time within 18 months. If you get hired by another company that offers health coverage, you can drop COBRA.

The in’s and out’s of COBRA can be confusing. The Employee Benefits Security Administration’s website spells out all of the details. Read on for additional health care coverage options.

A spouse’s plan

Look into your partner’s health insurance coverage. If your spouse is covered by their employer’s health plan, you may be able to get coverage, too. Losing your job qualifies you for a special enrollment period, so you don’t have to wait until the beginning of the calendar year.

The ACA (Affordable Care Act)

Regardless of your health status and any pre-existing conditions, you’re assured individual insurance coverage through the ACA. If you’ve been fired, you’ve got a 60-day enrollment window to shop for a plan using the ACA Marketplace. Being fired allows you to get onto a new plan outside of the yearly open enrollment period, and coverage can start the first day of the month after you lose your former insurance.

Depending on your family’s financial status, you could be eligible for an ACA tax credit that lowers your monthly premiums and out-of-pocket costs for deductibles and more. Look into every variable before you decide to enroll. If your family’s income falls below a certain threshold, you can qualify for free or low-cost coverage from Medicaid or the Children’s Health Insurance Program and enroll any time of year. If you qualify, coverage begins immediately.

If you do decide to take COBRA, the Marketplace enrollment window closes and you’ll have to wait until the next open enrollment period to shop there for a plan. Heathcare.gov can point you to options available in your state. When comparing costs, make sure to check the benefits, deductibles and copays for each plan.

State health coverage

Your state may have a health care continuation law that provides better or broader coverage than COBRA. State plans often cover smaller employers and are required to follow whichever law is most beneficial to you. To be eligible, most state laws require that you’ve already had coverage for at least three months before being fired. To find out more, contact your state insurance office or labor department. Nolo.com also has a comprehensive list of state laws on continuing health insurance coverage.

Some cities even offer health insurance. San Francisco launched Healthy San Francisco in 2007 to cover healthcare for uninsured residents. In 2019 New York City began offering a health insurance program to more 600,000 uninsured residents who were either unable to afford coverage or who were living in the United States illegally.

In the case of serious illness

The California Civil Rights Law Group advises employees with serious health conditions who depend on employer health coverage for life-saving treatment. “Health insurance is one of the most important benefits employees rely on, and when someone unexpectedly loses their job they need to understand what their options are,” says Navruz Avloni, an attorney there. “We’ve handled cases where employees were diagnosed with life-threatening illnesses, or were injured on the job and shortly thereafter, got fired. In that kind of situation, you should consult with an attorney to see whether your federal or state rights have been violated.”

For more advice about accessing benefits and managing your finances after a job loss, check out LiveCareer’s library of resources. We offer tips and tricks to make your transition a smooth one and ideas for how to gather the help and support you need during your period of unemployment.