Navigating Health Insurance After Layoffs or Furlough

Losing your job, whether through a layoff or furlough, can be overwhelming, especially when it comes to managing your health insurance policy. In this article, we’ll walk through the essential steps to maintain healthcare coverage and explore your options, such as COBRA and the Health Insurance Marketplace, to ensure continued access to care during uncertain times.

Immediate Health Insurance Changes After a Layoff

Employers typically prepay health insurance premiums, so your coverage may continue for several weeks after your departure. However, timelines vary, so it’s important to confirm with HR how long your coverage will last post-layoff.

Additionally, ask about any severance package that may include extended health coverage or financial support. Don’t forget to apply for unemployment benefits, which can provide temporary income while you search for new work.

What Happens When Employer-Sponsored Health Coverage Ends

Your employer-sponsored health benefits may be terminated when your job ends, whether due to resignation, layoff, or a shift from full-time to part-time status. At that point, you’ll need to secure alternative coverage, such as:

• COBRA continuation coverage

• A new plan through the Health Insurance Marketplace

• Enrollment in a spouse’s or partner’s plan (if eligible)

Timeline for Losing Employer Health Insurance

The timing of your healthcare coverage ending depends on your employer’s policy and the reason for your departure. Common scenarios include:

• Immediate Termination: Coverage ends on your last day of employment, especially in cases of resignation or contract completion.

• End-of-Month Termination: Many employers extend coverage through the end of the month in which you leave.

• COBRA Grace Period: If eligible for COBRA, you have 60 days from the loss of coverage to enroll retroactively.

• Severance Packages: Some employers include extended benefits, so ask about coverage details during negotiations.

• Furloughs: Some companies continue health coverage during furloughs, though not all do. If coverage is paused, COBRA is typically available.

COBRA: A Safety Net After Job Loss

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to continue your group health insurance for up to 18 months after your job ends. However, you’ll be responsible for 100% of the premium, including the portion previously covered by your employer.

Some employers may subsidize COBRA premiums temporarily as part of a severance package, but this is not guaranteed. Be sure to ask during your exit process.

What Happens if You’re Furloughed?

While furloughed employees typically stop receiving pay, they often retain their employment benefits, including health insurance. If this applies to you, you’ll still be responsible for your share of the premiums and may have the option to defer payments until you return to work, depending on your employer’s policy.

Health Insurance Options for Furloughed Employees

If your employer ends your coverage during a furlough, take these steps:

1. Apply for Unemployment: Each state has different rules, so check your eligibility and apply as soon as possible.

2. Evaluate Your Finances: Create a realistic budget to determine if you can maintain premium payments or need to seek alternatives.

3. Consider Emergency Funds or Retirement Accounts (Cautiously): While tapping into retirement savings is not ideal, it may be necessary in extreme cases. Weigh tax penalties and long-term impact first.

4. Explore Other Job Opportunities: Since furloughs don’t guarantee reinstatement, look into roles within your field.

5. Seek Temporary Work: Some companies allow furloughed employees to accept temporary jobs. Confirm with your employer before taking outside work.

   
   

By taking proactive steps and understanding your options, you can maintain your health coverage and financial security during job disruptions—whether short-term or long-term.

Facing a Layoff or Furlough? You’re Not Alone.

FedAdvantage supports federal employees during times of transition by helping you understand your benefit options, including health coverage, COBRA, and retirement planning. Visit FedAdvantage to explore resources or speak with a benefits expert at no cost.