How Long is Health Insurance Active After Termination?

Health insurance termination can happen for any number of reasons — inability to manage premium payment, a change in job, or even a voluntary switch due to marriage or a change in coverage. 

No matter the reason for termination, the loss of health insurance coverage comes with many questions. Mainly, how long will the health insurance policy stay active following the termination? 

Most often, the length of time you’ll continue to have healthcare coverage will vary depending on your specific situation and type of insurance. As such, we’ve put together a guide to outline some general information about:

• Types of insurance and continuation policies
• What is COBRA insurance?
• Alternatives to COBRA
• Risks of being uninsured
• Insurance statistics in America

If you’ve lost your health insurance, you can search for new coverage by comparing health insurance rates near you with our free tool now.

Types of Insurance and Continuation Policies

When gauging how long your health insurance policy will continue following termination, you must account for the type of insurance policy you have. The most common types of health insurance in America include:

• Private insurance or marketplace coverage
• Medicaid
• Employee-sponsored insurance

Private Insurance or Marketplace Coverage

Private insurance is a type of private health insurance that you obtain on your own, rather than the type of private insurance that you acquire through an employer.

If you choose to terminate your private insurance policy, you will be covered through the end of the final month that you paid for.

For example, let’s say you get a new job that has a healthcare plan for any eligible employee and you pay your premium for your private plan for the month of July. You’ll be covered by that plan until July 31st at 11:59 p.m. 

After this deadline, your plan will be terminated and you will then need to begin coverage with your new employer’s health plan. 

Medicaid

Medicaid is a state and federal program that mitigates healthcare costs for people with limited incomes or resources. 

If you lose your Medicaid coverage, you will have a 60-day special enrollment period in which you can apply for marketplace coverage, even if it’s outside of the open enrollment period. 

However, the special enrollment period doesn’t begin until the day your Medicaid coverage ends, making it difficult to prevent gaps in insurance coverage.

Several factors may lead to the termination of your Medicaid plan, including:

• Failing to report a change in family status – If you get married and do not notify state administrators of the change, you may no longer qualify for Medicaid and your coverage may be dropped.
• Increasing your income – If you are eligible for Medicaid but then get a job that raises your yearly pay above the Medicaid qualifications, you are required to report this to the Medicaid agency in your state. 
• Receiving a monetary gift or inheritance – Since you must have limited income to qualify for Medicaid, an increase in income may result in the termination of your plan.
• Moving to another state – If your income does not qualify for Medicaid in another state, you will not be eligible to continue your coverage.

When your Medicaid insurance is terminated, you’ll have two options: 

• If your employer offers health insurance, you can enroll in their plan. 
• If an employer-sponsored plan is too expensive, you can find a more affordable plan, perhaps with financial assistance, from the healthcare marketplace.

Employee-Sponsored Insurance

Finally, if you have employer-sponsored group health insurance, the amount of time you will continue to receive coverage following termination is entirely up to your employer and dictated by their policies. 

The employer can choose to end your coverage the day you are terminated from your job or they can offer you a period of coverage extending past your last day. If you quit, the same procedures would apply. 

However, all employers who offer health care plans to their employees are required to offer continuation coverage at the employee’s expense for a minimum of 18 months per COBRA guidelines. 

What is COBRA?

So what is COBRA? It stands for the Consolidated Omnibus Budget Reconciliation Act. This law requires that your employer gives you the option to extend your health insurance under the employer’s group plan for a minimum of 18 months after leaving employment.

All employers with more than 20 employees are required to follow this law.

The only caveat is you cannot have been fired for gross misconduct. Typically, this would include stealing from your employer or committing fraud. 

If you elect to continue your coverage, you’ll be responsible for paying the full premium, including the portion your employer used to pay. There may also be an administrative fee attached. 

If your spouse or dependents were covered by your plan, they will also continue to receive coverage if you elect to continue your group coverage under COBRA. Take a look at our COBRA insurance buying guide if you’re considering this alternative.

How Does COBRA work?

If you happen to be a terminated employee or if you elect to quit, you’ll receive paperwork offering you the ability to enroll in continued coverage. You can choose to enroll as a COBRA participant or decline the opportunity, depending on your personal situation and individual coverage. (For more information, read our “COBRA Health Insurance: What to Know & How to Save“).

How Much Does COBRA Cost?

We’re not going to lie — COBRA coverage is expensive. Typically, when you’re part of a group plan through your employer, the employer pays a portion of the premium for your plan. The remainder comes out of your paycheck. When you extend your coverage through the COBRA plan, you are responsible for the entire premium payment.

For example, if you typically had $300 deducted from your paycheck each month for insurance coverage, and your employer paid $300 each month as their portion, you’d now be responsible for the entire $600 premium each month. 

Be aware that when you’ve just lost your job, this might be far too costly to cover out-of-pocket. Many people decline COBRA coverage due to the high cost and seek insurance elsewhere.

Alternatives to COBRA

If you’ve recently ended your employment and are unable to afford COBRA continuation coverage, there are additional options available that may be less expensive, including: 

• Medicaid
• Marketplace coverage

Medicaid 

Medicaid requires that you and your family meet certain standards for income or other requirements. The threshold for Medicaid income limits is quite low — your income must be at 133% below the federal poverty level for your family’s size. The process to obtain your policy can also take some time to be completed.

Marketplace Insurance

For many people, applying for health insurance through the marketplace is the fastest way to get insurance quickly after a job loss. Furthermore, a job loss may give you the option to receive assistance to pay for your healthcare. 

According to Healthcare.gov, if you lose your job, you can also qualify for a special enrollment period, in which you can enroll in coverage outside of the typical open enrollment period.

Risks of Being Uninsured

As of 2019, there is no longer a fee from the federal government for not having health insurance. However, some states still have minimum health insurance requirements. Outside of this, there are several risks associated with not having health insurance. They include:

• Hefty medical bills – If you don’t have insurance and have a medical emergency, you could be responsible for paying an enormous bill. Medical care is ridiculously expensive and very few people can afford to pay out-of-pocket for even minor procedures.
• Poor health – When you don’t have insurance, you can’t take advantage of preventative care and testing. This can lead to a small, treatable problem becoming something more serious (and expensive) down the line. 
• Lack of access to care – While emergency rooms are required to treat you regardless of your insurance status, other providers can refuse you care if you don’t have health insurance or a proven way to pay for their services.
• Inability to get needed prescriptions – Without insurance, you may not be able to afford the prescription medications that you need. This can lead to severe health problems. As such, many people have to turn to high-interest credit cards to pay for prescriptions, which may lead to more debt.
• Debt or bankruptcy – Finally, if you are without health insurance and end up with bills you cannot pay, your credit can be destroyed. Medical issues and the high cost of care are among the top reasons Americans file for bankruptcy — over 500,000 people are estimated to file for bankruptcy every year because of medical bills or issues.

Insurance Statistics in America

In 2019, it was found that more than 55% of Americans got their health insurance through their employer. Americans who did not get employer-based insurance acquired a health insurance policy in the following ways:

• 6% purchased health insurance privately or through a state or federal marketplace
• 37% were covered by public insurance such as Medicare or Medicaid
• 10% remained uninsured

When referencing this data, it’s important to note that the information includes people from all age groups. Additionally, percentages changed throughout the year as people switched insurance providers due to factors like job loss and change in economic status.

Find the Best Rates on Health Coverage

We know that losing your health insurance coverage is frightening and stressful. No matter what type of active coverage you had, transitioning to a new plan can be difficult. 

If you’re in a situation that requires you to find health insurance coverage, our free tool helps you gather and compare quotes from the nation’s top insurance providers. That way, you can find the best coverage and rates to meet your insurance needs. Let us help you today.

Case Studies: Health Insurance Coverage After Termination

Case Study 1: Ace Insurance Co.: Extended Coverage for a Grace Period

Mr. Johnson worked for a large corporation that offered health insurance through Ace Insurance Co. He decided to resign from his position due to personal reasons and wondered how long his health insurance coverage would remain active.

After contacting Ace Insurance Co., Mr. Johnson learned that his health insurance would remain active for an additional three months from the date of his termination. This extended coverage period allowed him sufficient time to find new employment and make alternative arrangements for health insurance.

Case Study 2: Secure Health Services: Immediate Termination of Coverage

Ms. Rodriguez was employed by a small startup that provided health insurance coverage through Secure Health Services. Unfortunately, due to financial difficulties, the startup had to close its operations and terminate all employee contracts. Upon termination, Ms. Rodriguez discovered that her health insurance coverage ended immediately, leaving her without any form of insurance.

She had to explore other options, such as purchasing an individual health insurance plan or seeking coverage through a spouse’s policy.

Case Study 3: Vitality Health Insurance: COBRA Continuation Option

Mr. Thompson was laid off from his job at a manufacturing company that offered health insurance through Vitality Health Insurance. Concerned about losing his health coverage, he inquired about the available options for continuing his insurance. Vitality Health Insurance informed Mr. Thompson about the COBRA (Consolidated Omnibus Budget Reconciliation Act) continuation option.

With COBRA, he had the opportunity to extend his health insurance coverage for up to 18 months after termination. While the cost of the coverage was higher than what he paid as an employee, it provided him with a temporary solution until he could secure new employment.

Case Study 4: Guardian Life Insurance: Termination Date as Coverage End Date

Ms. Collins worked for a mid-sized company that provided health insurance through Guardian Life Insurance. When she decided to leave her job to pursue self-employment, she wanted to understand how long her health insurance coverage would remain active.

Upon contacting Guardian Life Insurance, she learned that her health insurance would cease on the same day as her termination date. Ms. Collins had to plan accordingly and find an alternative health insurance option that suited her new status as a self-employed individual.

Case Study 5: United HealthCare: Transition to Individual Marketplace Plans

Mr. Lee was let go from a large corporation that offered health insurance through United HealthCare. Wondering about the duration of his health insurance coverage, he reached out to United HealthCare for clarification. He discovered that his employer-sponsored health insurance would be active until the end of the month in which he was terminated.

However, United HealthCare informed him that he had the option to transition to an individual marketplace plan through the Affordable Care Act (ACA) and avoid any gaps in coverage. This allowed Mr. Lee to explore alternative insurance options and maintain continuous health coverage.