From the course: Managing Your Finances Through a Career Transition or Layoff

Planning health insurance during transition

From the course: Managing Your Finances Through a Career Transition or Layoff

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Planning health insurance during transition

- Having health insurance is always important, even between jobs, so that you can protect you from unexpected out-of-pocket expenses. After all, medical emergencies are unpredictable and can even occur when we're out of work. Often when we are in a job transition, we go without health insurance, hoping to save some money and hoping our new job comes quickly and with health insurance benefits. However, as you know, this can quickly become a mistake if we get sick. So what's the solution? When a life event happens, you'll want to move quickly, as you have a limited time to make a qualifying event change, typically just 30 days. First, let's talk about COBRA. COBRA stands for Consolidated Omnibus Budget Reconsolidation Act. This act gives employees and their families who lose health benefits the right to continue health benefits provided by their health insurance for limited periods of time under certain circumstances, such as job loss, death, divorce and other life events. Keep in mind, you often have the choice to extend your job-based coverage for up to 18 months with a COBRA plan. This will likely be more expensive, but it's a health plan you're familiar with through your past employer. When you're employed, your employer likely pays a major part of those health insurance premiums. And when you leave, you have to pay both your normal premium plus what the company paid as your employee benefit. You may be shocked by the price of COBRA coverage. However, there are other options. Short-term health insurance plans are another option to look into. These plans are typically cheaper, but they don't cover everything that a traditional health insurance plan would. They usually don't cover prescriptions, preventive care, maternity or pre-existing conditions. And another thing to keep in mind is that these plans also don't count as minimum essential coverage under the Affordable Care Act. Currently, as I'm saying this in 2021, there isn't any penalty. However, as legislation does change, I recommend to always check in on the website, irs.gov or ask your accountant if you have one. Here are some examples of plans that would not qualify for a MEC: plans that provide only discounts on healthcare services, plans that cover only dental or vision, care under workers' compensation plans, plans that provide care only for a specific condition rather than general medical coverage. Another option is buying a plan yourself through the health insurance marketplace. These are state-specific plans. For most states, you can do this easily online or call your local specialists to assist. For up to 60 days after you lose coverage from your past job, you qualify for a special enrollment period. During this time, you're able to enroll into a new plan. When applying, you'll learn if you qualify for federal financial assistance such as tax premium credits or cost sharing reductions. Lastly, if you have previously contributed to a health savings account or HSA, those funds are typically still available to you, even after you've left your job to help pay for eligible medical expenses. Research what the best approach is for you and your family's needs. The questions I provided in the exercise file are a great place to start if you're not sure what questions to ask. There is hope and protection for you and your family. You just have to take the first step in going out to find it.

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