There is simply no getting around the fact that unemployment immediately disrupts the balance of your life. Often times, most people don't know that unemployment is looming, it happens unexpectedly and much like an explosion, there is an aftermath and associated ripple effects that need to be identified and dealt with in order to minimize the resulting damage. Reassessment of your finances is usually the focus point of unemployment since your finances are the platform on which you make your way through life. However, one of the things that can easily be overlooked in a scenario which finds you unemployed is continuation or your health insurance and benefits.
Much like there are immediate financial implications from being out of a job, there are also potential direct issues if you are without insurance or coverage of some kind. Immediately, not having coverage leaves you without any protection against major medical expenses, long term you run the risk of not being able to enter into a more permanent arrangement with your health insurance plan.
If you've always had insurance and coverage through your employers, chances are that you've not really given too much thought to the prospect of being without insurance for an extended period – and why would you? You've likely always been employed, and thus, covered with regards to your health. There are two major options you can choose from:
You can continue to receive coverage from your (now) former employer, but it will be at your own expense.
You can take the opportunity to seek out a new private market health insurance plan that will ensure you receive long term coverage.
There is a federal statute in the United States that does guarantee that your employee based health insurance coverage can be retained in the event of unemployment and subjected to a limited amount of portability. Under the Consolidated Omnibus Budget Reconciliation Act (aka COBRA, est. 1985), you are entitled by law to retain the insurance coverage with the condition that it is now your responsibility to pay for it on your own.
There are of course restrictions and certain eligibility levels and limits in relation to the length of coverage and whether your employment and subsequent dismissal meet various criteria (*the details of which can be obtained from the Human Resources department of your former employer).
Be aware of the fact that once the employer contribution aspect is removed from your health insurance coverage you will likely be quite surprised at how much it will cost to maintain the coverage via the COBRA program. This cannot be overlooked. For some however, the simple fact that there is something in place to allow health insurance coverage continuity during your period of unemployment may be enough to warrant the COBRA option as a short term solution.
Besides finding a new job, there are of course other choices for those who don't feel the COBRA option is suitable for their financial situation but do not want to go without health insurance for an extended period. You may opt for the following coverage types:
Family Plan Coverage
If you are married and your spouse has a health insurance through their employer or a private policy you may be eligible to be placed on their plan. There are of course going to be numerous stipulations and eligibility specifications so you will need to either read over the literature of the plans details or speak to someone about them. If you are eligible for coverage under your spouse's plan this is likely your most economical and easiest method of maintaining coverage.
Short Term Health Insurance
This is a good "plan B" to investigate in the event that you do not qualify for the spousal option detailed above and also feel as though you will not be unemployed for an extended period of time, in other words – it is perfect for somebody in transition. Most short term coverage plans entitle the user to basic coverage at a rate that may be much more palatable than a similar scenario under the COBRA plan. One caveat of a short term plan is that it is subjected to limitations, hence its name – you can probably only be covered for six months to a year at most. Other limitations are likely to include the types of procedures, tests, number of visits and medications covered.
Private Health Insurance
This option circumvents both of the options outlined above as you can enroll in a health insurance plan that is not tied in any way to your former, current or future employment.
Sudden or unexpected unemployment is always going to impact your immediate financial situation, and while it would be easy to categorize your health insurance coverage as a luxury in such a scenario, doing so can leave you in a potentially much more dire situation should you need to pay for medical expenses out of pocket – learn more about your options and ensure you aren't putting yourself in a risky position, regardless of your employment status.