Health Insurance After Getting Laid Off vs. Quitting vs. Getting Fired

The COBRA health insurance extension may apply if you lose your job, but you’ll have to pay for it

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UPDATED: Jun 23, 2022

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Written By: Chris TepedinoReviewed By: Laura WalkerUPDATED: Jun 23, 2022Fact Checked

The Rundown

  • The COBRA federal law allows many people to retain membership in their group health insurance plan following termination, whether voluntary or involuntary
  • This coverage will last for 18–36 months but only applies to private companies with 20 or more employees that offer group health coverage
  • Some states may offer a similar plan for smaller organizations

It’s a good idea to have health insurance, given the high cost of medical care across the country. Many employers provide this level of coverage to workers and their families, and it goes a long way to providing the right level of protection for any worker. 

Yet, what happens to this insurance when the company fires you, or you otherwise leave that organization? If you’re in this position, you may be particularly worried you’ll lose coverage. The good news is that you can keep your coverage — but it will probably cost you more than what you’re paying through your employer. Read on to learn how it works.

What happens to insurance when you get fired or quit?

Typically, your health insurance coverage will automatically stop when you cease your employment. The specific details may vary based on your company policies, so you should discuss this matter with your human resources manager. Some companies may allow you to benefit from this coverage until the last day of the month that you quit. For others, your health insurance may end the day after you get fired or laid off.

The good news is that you can typically take advantage of a special federal law under the Consolidated Omnibus Budget Reconciliation Act, or COBRA. This law allows employees to continue taking advantage of their employer-provided health insurance whether they were laid off, fired, or quit. Workers are also eligible for COBRA benefits if the employer reduces their hours below a minimum threshold.

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Does my employer offer COBRA coverage?

Private employers must comply with this law so long as they have a minimum of 20 employees and provide group health coverage for their employees. Smaller employers may need to comply with similar rules introduced by their states. For example, Florida has the Health Insurance Coverage Continuation Act, which offers similar benefits to COBRA but applies to companies with 19 or fewer employees.

If your employer offers COBRA and you’re enrolled in its healthcare plan, it automatically applies if you have a qualifying event that causes you to lose coverage. Qualifying events include a reduction in hours, layoffs, quitting, and termination for anything other than gross misconduct. In these cases, the law requires your employer to offer continued coverage to you and your family. This coverage must be identical to what you had before leaving the job.

How long does insurance last after being terminated?

COBRA coverage is temporary and will last for 18 to 36 months, depending on the type of qualifying event. There are additional rules covering people with disabilities or offering extended protection to a qualifying spouse or dependents should the employee die during the initial period.

How much does COBRA coverage cost?

Each employee or beneficiary must pay the full premium to continue receiving COBRA benefits. If your employer paid a portion of your health plan costs before, then COBRA will likely be more expensive. Therefore, it’s good to check other alternatives before agreeing to a COBRA extension.

For example, you may be able to find an alternative through the Health Insurance Marketplace. Alternatively, it may be more economical to join your spouse’s plan. Some people choose to take short-term health insurance plans, especially if they have already lined up another position. In this case, check the levels of coverage to see if you would get the same benefits as you might through the COBRA extension.

If you qualify for COBRA health insurance after getting laid off or otherwise terminated, your former employer will send you a letter within two weeks of leaving the job. You then have at least 60 days to decide or to waive your coverage.

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When does health insurance expire after leaving a job?

Whether you quit, are fired, or are laid off, you may be able to take advantage of a COBRA health insurance extension as part of federal legislation. This will be in place for companies of a certain size, but similar state legislation may apply to smaller organizations. COBRA coverage will also extend to certain family members, but you will have to pay the full cost of the premiums. Some people may find it more cost-effective to look for other solutions, like short-term coverage or programs available through the insurance marketplace.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent Laura Walker

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