Being covered for health insurance is very necessary, but what if you’re terminated?
Introduction to Health Insurance
Health insurance can be very costly, especially if you have a history of illness in the family and depending upon your job’s nature. You could be looking at spending hundreds of dollars on your health. In such cases having an employer pay for health insurance is your best bet, you don’t even have to worry about paying premiums each month, and you will be given full benefits of the policy.
However, due to any unfortunate incidents, an employee can be terminated, so what about their health insurance? Is it still there? How long is it active even after termination? Many questions come to your mind when you think of leaving a current employer providing health insurance. We’ll get to the answers later in this article.
But first, let’s see what a health insurance plan is.
A typical health insurance plan provides coverage to employees if they are engaged in any unfortunate incidents. The insurance coverage offers:
- Medical expenses
- Hospital visits
- Treatment for injuries
- Recovery cost
Health insurance policies are active for some time, but that also depends on several factors like the type of health insurance you have. Let’s look in the details more.
How long is my Health Insurance active after termination?
If your health insurance plan is associated with your employers, the premium is paid at the beginning of each month. So at any point that you’re terminated, you’re covered for the whole month because the premium has already been paid.
However, in some company policies, the moment an employee’s resignation letter is accepted by the HR, their record is deleted. Meaning, the insurance will be immediately canceled. Companies want to save their costs as soon as an employee leaves because they shouldn’t still be receiving health coverage when they’re not even working anymore.
There is no specific time limit to health insurance termination declared by law, it solely depends on the company you’re working in and what their policies are. Some companies are generous enough to extend 18 months through COBRA (we’ll talk more about COBRA in a while), and some companies give you coverage until you find a new job.
Short for Consolidated Omnibus Budget Reconciliation Act, COBRA is a health insurance feature that gives you coverage when people are leaving one employer to either be self-employed or join a new company.
There are two qualifying events where an employee can receive benefits under COBRA:
- Termination of the employee for any reason other than gross misconduct
- Reduction in the number of hours of employment
You’re eligible for COBRA protection if your employer has the health plan supporting it and if the program is active for other employees too. Upon termination, there are 30 days given to you or your employer to notify about your termination to allow further coverage.
The benefits and overall policy remains the same. You are entitled to the same coverage and the same interests, even after your termination.
Cancelation of health insurance reasons
For your health insurance plan to be canceled, you don’t only need to be terminated. There are many reasons why your policy could be canceled, and you would no longer be under coverage. Some of the most highlighted reasons are as such:
- If premiums are not paid
- You’re given a grace period of 30 days to pay all missed premiums, and if you miss the grace period too, your insurance policy is automatically canceled.
- The employer doesn’t have group protection plans anymore.
- Employees find another source of insurance; they attach themselves to their spouse’s insurance plan.
- Gross misconduct in the company will result in loss of health coverage, and employees won’t be covered under COBRA too.
Health Insurance Termination Form
Employers get a termination form from their insurance company where they fill out the employee’s information and some other data to ensure health coverage termination.
The form also mentions COBRA in case the employee wants to continue coverage and also the dependents information.
This is what a typical health insurance termination form looks like:
This is the gist of all the information you will have to provide for the coverage to be terminated, and for every insurance company, the form may vary. Depending on the type of health coverage and dependents, the structure may ask you for further details and some documents.
You can either call or email your insurance company to send you the termination form; the time limit to do this is usually 30 days when the employee leaves the company.
Having health insurance through an employer seems desirable; your company pays for premiums each month that provides you coverage. But an employee could be terminated for any reason, does that mean they get to carry on with their coverage?
Well, the answer to this isn’t a simple Yes or No. Entirely dependent on the policy’s situation and nature, the employer may decide whether the employee shall be allowed coverage or not. Some generous employers will enable a lot of months for coverage under COBRA, and some are rude enough to cancel the health plan as soon as an employee resigns.
If you’re looking for leaving the job, the best thing for you is to contact a health insurance agent and talk to them about coverage possibilities. If the next employer you’re working for is also offering coverage, you’re not in too much trouble. But if you’re unemployed for a while or looking to work as a freelancer, you will need coverage in medical emergencies.