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Losing your job unexpectedly is difficult because it also usually means losing your employer's health insurance. It's one factor many older workers are grappling with, as the federal government initiates "large-scale" cuts to its workforce after an executive order from President Trump while private businesses such as Meta also have launched layoffs this year. If you do lose your job, it's important to understand your health insurance options and take action right away, so you don't have gaps in coverage if you get sick.
First, find out when your coverage is ending. You may have coverage until the end of the month you're laid off or longer, depending on your employer. For example, Wayne Sakamoto, an independent health insurance agent and consultant in Naples, Florida, worked with several restaurants, retailers and entertainment businesses that laid off employees in March 2020 during the coronavirus pandemic. Those businesses opted to pay their health insurance premiums through April 2020. “It's a fluid situation,” Sakamoto told AARP at that time. “Some employers would like to at least extend coverage for another month, and hopefully keep people on their policies."
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After your employer's coverage ends, you can usually continue your employer's coverage (but pay much higher premiums) or buy a policy on your own. The best choice for you depends on each policy's premiums, coverage and provider network — and whether you've already had a lot of medical expenses during the current calendar year. “For some people, it could be a wash, and it might be easier to stay on your employer's plan, but for some people, there's going to be a really big difference,” John Barkett, a former senior director of policy affairs for the benefits consulting firm Willis Towers Watson, said in 2020. “It's worth it to do the comparison."
Here's what you need to consider when assessing your options.
Keep your employer's coverage through COBRA
This federal law requires employers to let employees them keep their health insurance coverage for up to 18 months after they lose their jobs. (COBRA applies to employers with 20 or more employees; most states have similar laws for smaller employers.)
Your coverage and provider network won't change, but your premiums will jump: You'll have to pay both the employee's and the employer's share of the premiums, plus up to 2 percent in administrative costs. Most employers pay about 70 to 80 percent of the premiums for their current employees. For example, the average worker paid $1,401 for single coverage in 2023, but the total cost of the coverage averaged $8,435; the average worker contributed $6,575 for family coverage, but the full cost was $23,968, according to the Kaiser Family Foundation.
COBRA can be a good option if you want to keep the same coverage and providers, or if you already had a lot of medical expenses in 2020 and would have to fulfill another deductible with a new policy. “If you've already paid through your deductible, it might be better to pay COBRA premiums for the rest of the year,” says Barkett.
Get individual coverage through your state's marketplace or healthcare.gov (and possibly a subsidy)
You usually have to wait until the open enrollment period in the fall to sign up for individual coverage through your state's insurance marketplace or healthcare.gov, but you can qualify for a “special enrollment period” if you lose health coverage through your job. (For a list of qualifying life events at healthcare.gov, see healthcare.gov/glossary/qualifying-life-event/.) You usually need to provide evidence that you lost your employer coverage when you apply. You have 60 days after losing your employer coverage to sign up for coverage on the marketplace.
Compare the cost of getting your own coverage with the premiums for COBRA. The individual policy may have different coverage and providers, and you'll need to start the deductible period again. Depending on your income and the number of people in your household, you may qualify for a subsidy to help pay the premiums. Single people can qualify for a 2025 subsidy if their income for the year is less than $60,240; couples can qualify with income of less than $81,760. The tools at your state's marketplace can help you calculate your subsidy and premiums.
You need to estimate your 2025 income to get a subsidy now, which can be difficult after a job loss. If you end up going back to work and earning more than expected before year-end, you may need to pay back some of the subsidy when you file your 2025 income tax return. “There may be people who go ahead and file for a subsidy, which might help them economically now, and if at the end of the year they end up doing better than anticipated, hopefully they will have enough money to pay that tax bill,” Sakamoto said in 2020.
The subsidy can make a big difference for people over age 50 who qualify. “The older you get in the individual market, the higher the premiums. Especially from ages 55 to 64, those premiums really ramp up a lot,” says Barkett. “But your subsidy might make the plan affordable."
Another option: Depending on your income and your state's rules, you may qualify for Medicaid. Go to your state marketplace or state Medicaid office for more information.
Find out if you can get coverage through your spouse's employer
If your spouse (or domestic partner, under some plans) has coverage through their employer, you may be able to be added as a dependent mid-year because you lost your coverage. Find out how much extra the coverage will cost.
Sign up for Medicare (or add Part B) if you're 65 or older
If you're 65 or older, you can sign up for Medicare. If you signed up for Medicare Part A when you turned 65 but hadn't signed up for Part B because you were working, you have up to eight months after you leave your job and lose that coverage to add Medicare Part B.
People who want to enroll in Medicare at 65 can sign up online at the Social Security website even if they don't plan to sign up for Social Security yet. If you didn't sign up at 65 because you were still working, you can't enroll online because you need to submit extra paperwork showing that you had coverage through your employer.
Editor's Note: This article originally was published on April 6, 2020. References to the coronavirus pandemic have been updated, along with information about average premiums and income qualifications for ACA subsidies.
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