Continuing Healthcare Coverage After Leaving an Employer

So you’ve accepted a job offer at a new company, but you want to take some hard-earned time off before you start. The problem is that your current employer will only pay your medical premiums through the end of your last month on the job, and you’re starting the new job in the middle of the following month. So what do you do for the two weeks in between?

COBRA, short for Consolidated Omnibus Budget Reconciliation Act, bridges this gap by providing workers and their families with continued group health benefits during this transition. Once you leave an employer, your plan administrator will send you information regarding your rights under COBRA, stating that you have 60 days from whichever of the following happens last: receiving this notice, the last day on the job or the last day of health care coverage at the end of the month. If elected within the 60-day window, the coverage becomes retroactive.

If you have a medical claim during the two weeks before you start with your new employer, you can elect for coverage after the fact within that 60-day window and pay one month’s worth of medical premiums to receive insurance coverage. Note that this could cost as much as 102% of the cost of the medical premium that was previously split between the employer and you. Still, this is much cheaper than paying thousands of dollars in medical expenses if you’re not covered. One suggestion is to put off any non-emergency medical visits for your family until after this two-week period.

It’s also important to know when your medical coverage for the new job starts. Many employers start these benefits on your first day, but some may have a 30-day waiting period.

Other COBRA Scenarios

Continued coverage under COBRA also applies in the following situations.

• Leaving a job voluntarily
• Becoming eligible for Medicare
• Having a dependent child who loses dependent status
• Having the number of hours you work reduced
• Death of the covered employee
• Divorce or other big life events

For a termination or reduction in hours worked, you and your family will be eligible for 18 months of continued coverage under COBRA, while the other scenarios qualify for 36 months of coverage. More information can be found on the Department of Labor website.