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Health Insurance Coverage Gap: What Happens After You Leave Your Job?

Posted: December 11, 2024

by Wendy Barnett

an hourglass is sitting in the grass at sunset

When you have lost your job, your medical insurance from your employer can end, too. Being without work can be a stressful time, but understanding your health insurance options doesn’t have to be. Explore your options for health insurance after losing your job with Health for California.

Understanding Your Health Insurance Options

From the day you lost your job and health insurance coverage, you have 60 days to apply for health insurance, regardless of what time of year it is.

Since the Affordable Care Act went into law, most health insurance enrollment is limited to the Open Enrollment period at the end and beginning of every year. When Open Enrollment is closed, you typically have to wait for the next enrollment period to apply for coverage. However, this time is also known as the Special Enrollment Period, meaning you can find coverage if you experience a Qualifying Life Event. Involuntarily losing your job is considered one of these Qualifying Life Events.

It’s also important to know that searching for new insurance is not your only option. While you must have some kind of insurance legally, there are a few options that may be immediately available to you:

  • COBRA: Many employers offer COBRA insurance to employees following job loss. This program allows you to keep your employer’s insurance for anywhere from 18-36 additional months. However, this coverage is usually more expensive than your other options and will not apply to you if you voluntarily left your position or were fired for gross misconduct.
  • Medi-Cal or APTC: Medi-Cal and the Advanced Premium Tax Credit (APTC) can lower the cost of your health insurance and help you stay covered within your budget. Note that if you choose APTC in California, you will have to get coverage from the California Exchange (Covered California).

Navigating Health Insurance Gaps

Say you lose your job in February, or even September. The enrollment period for most health insurance options does not open until November and closes in January. Thankfully, you won’t have to wait a year or even a few months to find new coverage.

From the day you officially lose your job (and its associated health insurance coverage), you qualify for a Special Enrollment Period. Losing your job-based health insurance is one of the Qualifying Life Events that allows you to get insurance coverage outside of the typical enrollment period. In most cases, you have 60 days from the day your job lapses to find coverage and enroll in a policy.

In situations like this, financial stress is often a big hurdle in choosing the right coverage for you and your family. Depending on your finances, you may qualify for Medi-Cal, California’s Medicaid health care program. Medi-Cal enrollment stays open year-round, so you can apply at any time. In California, the law requires most people to have health insurance or pay a fine, so it’s important to begin looking for coverage as soon as you become uninsured.

Short-Term vs. Long-Term Solutions

Most people, especially those with families and children, want a long-term insurance solution as quickly as possible. However, if you’re single or you have another job lined up, there are short-term health insurance solutions you can apply for between jobs until you find an acceptable long-term solution.

California no longer allows the purchase or sale of short-term health insurance. Instead, Californians can purchase health sharing plans through Health Care Sharing Ministries (HCSM). These affordable plans can fill gaps in coverage for periods that range between 30 days and 12 months, relieving the pressure while you search for a new position.

Managing Costs and Financial Assistance

If you are currently enrolled in insurance through Covered California and have lost all or part of your income, you should also check to see if you qualify for lower premiums, since people with lower incomes can receive additional assistance.

Common Questions About Losing Health Insurance

Whether you lost your job or left to pursue a new direction, losing your health insurance can feel overwhelming. Here are answers to a few common questions you might have:

What are Qualifying Life Events?

Qualifying Life Events (QLE) allow you to enroll in health insurance outside of the “normal” allowable time. There is a list of life events that can count, but losing your employer health insurance due to a job loss or change, is typically an acceptable QLE.

You may have a QLE that allows you to enroll in health insurance during a Special Enrollment Period.  Here are the important guidelines if you have recently lost employer health insurance:

  • The date of the loss of coverage must have occurred within the last 60 days
  • Your loss must be involuntary
  • You must be able to provide verification to prove your loss of coverage and the loss event date upon request

Covered CA requires random applicants who enroll during the Special Enrollment Period to provide documents that verify their QLE.

How do I find out the date of my loss of coverage?

Ask your employer or the human resources department at your work about when your employer coverage will end. You can apply up to 60 days before and up to 60 days after your loss event date.

What about quitting my job?

Losing your health insurance from your job because you quit can count as a life event! Just make sure to apply for coverage within 60 days.

If I cancel my COBRA coverage, will that be counted as a QLE?

No. Canceling your COBRA because it is too expensive or you have changed your mind is not considered “involuntary,” so it is not a QLE.  As a result, it is wise to explore your options, including Covered CA plans, before you elect to take COBRA.

Please note, if you applied for a Covered CA plan within your 60-day window of time from your loss of coverage date, and you find out that your insurance won’t start right away, you can opt to take your COBRA coverage for a month or two to fill in the gap. Just be sure to cancel your COBRA when your Covered CA plan is supposed to start.

Will I be able to afford health insurance with my job loss?

Many people are surprised to find out that they can receive APTC through Covered CA that helps their health insurance premiums to be very affordable. Some monthly premiums can be as low as $1. It’s easy to find out if you qualify for APTC by getting a free quote. Remember to include all of your household income for the quote (this would be income from each person who appears on your tax return for the current benefit year, income from your prior job, and any unemployment benefits that you might be receiving).

What if my loss does not count as a QLE?

Review the list of Qualifying Life Events to find out if you have a different life event that counts. If your loss does not qualify, here are a few things you should remember:

  • If you don’t qualify, you can enroll during the next Open Enrollment in the fall of each year
  • Depending on your income, you may qualify for Medi-Cal, which is open for enrollment year-round
  • You may have to pay a Health Insurance Penalty if you go without health insurance

Need help?

To get a free quote with a subsidy or ask questions about applying during a Special Enrollment Period, call a Certified Covered California Agent at 877-752-4737.