More than 50 percent of Americans get their health insurance through their employer.
But just because you were laid off doesn’t mean you won’t be able to get the health care services you and your family need. Here’s what happens to your health insurance when you’re laid off and how you can keep your current insurance or find an alternative.
what happens to my health insurance when i get laid off?
Depending on your plan, you can keep your current health insurance benefits through the end of the month. be sure to check that you have been fired rather than suspended. those who are furloughed remain employees and may retain access to their benefits, though they will still be responsible for any premiums, copays, or deductibles.
What health insurance options do I have?
An acronym for the Consolidated Omnibus Budget Reconciliation Act, Cobra may allow you to keep your current health insurance for up to 36 months as long as your business has at least 20 employees. You must elect the collect coverage within 60 days of your termination. coverage is generally retroactive, meaning it will apply to the date you lost your benefits, regardless of when you elect to participate.
If your company covered any of your health insurance premiums in the past, you will now be responsible for paying the entire bill. most employers cover about 82 percent of individual plan premiums and 70 percent of family plan premiums. Average annual employer-sponsored premiums are around $7,200 for individuals and $20,500 for families. charges charges may also include a 2 percent administrative fee on top of the total cost of the premium.
While they may be expensive, cobra plans have the advantage of allowing you to keep your current doctors and prescriptions covered. And, unlike if you change plans, you will continue with your previous insurance deductible and maximum out-of-pocket contributions for the calendar year.
Please note that if your company has gone out of business, you may no longer be able to access your old health plan.
affordable care law
Depending on your financial and medical situation, it may make sense to look into the Affordable Care Act (ACA) Marketplace for an alternative plan. Because losing a job is a qualifying life event, you have access to a Marketplace plan no matter when you’re laid off.
Average plan costs here are $331/month for the lowest tier, and given your lack of income, you may be eligible for discounted rates. The Marketplace will also help you determine if you qualify for free or low-cost programs like Medicaid or Children’s Health Insurance Plan (CHIP).
Note that if you switch to a plan here, you’ll have to start over with your deductible and out-of-pocket maximum for the year. Calculate the cost of this when deciding how to continue your health insurance coverage. You may also need to replace your current doctors (or pay out-of-network fees) or switch current medications to alternatives covered by your new plan.
How can I pay for my health insurance if I get laid off?
If you’re laid off, you don’t necessarily have to pay the full costs of your health insurance plan out of pocket. here are a couple of other options.
health savings account (hsa)
if you’ve previously been in a high deductible health plan (hdhp), you may have set up a health savings account (hsa) in the past. As with 401(k) retirement accounts, you retain ownership and access to your HSA even if you are laid off. And, unlike flexible spending accounts (FSAS), HSAS can be used to cover health care premiums with money tax-free.
However, if you have invested portions of your HSA, be aware that depending on prevailing economic circumstances, you could end up selling some assets at a loss. That said, HSAS can offer a financial safety net when it comes to paying for large medical expenses.
individual retirement account (IRA)
Although they are accounts designed to help you invest for retirement, you may be able to use the funds in your individual retirement account (IRA) for health care expenses.
If you have a Roth IRA, you can withdraw any contribution you’ve made at any time without paying penalties or taxes. The IRS also allows penalty-free withdrawals from traditional IRAs to pay for medical expenses that are not reimbursed by health insurance and exceed 10 percent of your adjusted gross income for the year (if you’re under 65). If you’ve had your Roth IRA open for more than five years, you can also withdraw your investment earnings for medical expenses penalty-free and tax-free if they meet the above criteria.
Also, if you lose your job due to the coronavirus, a hardship withdrawal can allow you to withdraw up to $100,000 from your anger without a 10 percent penalty. but he will have to pay back his anger within three years to avoid paying taxes or penalties on the withdrawal.
Keep in mind that if you dabble in your IRA account, you may lose years of potential growth and walk away when investments are priced lower than you paid for them.
the end result
You always hope you don’t have to use health insurance, but even in normal situations, it’s important to maintain access to some form of health insurance when you lose your job.