Health insurance between jobs

Last Updated on February 15, 2018 by Dave Farquhar

I recently changed jobs, and although I’ve dealt with gaps in medical coverage before, I didn’t anticipate everything this time. Let’s talk about what to do for health insurance between jobs. And let’s talk coverage too–they aren’t always the same thing.

First things first: gaps are likely, and the laws are written under the assumption that small gaps will happen. The system still isn’t what I would call fair, not that it ever has been, but generally it’s possible to navigate the system and get the coverage you need. I’m not here to complain about the system; I’m here to tell you what I did, or could have done, to navigate it.

Gaps in coverage

Let’s talk about gaps first. Many employers don’t let your health coverage kick in until you’ve been on the job for at least 30 days, or, worse yet, on the 1st of the month after you’ve been employed for at least 30 days.

Since that’s probably clear as mud, here’s a scenario. If you start work on July 2, you might not be eligible for health coverage until August 2, or, perhaps since you weren’t eligible on August 1, you’ll get pushed all the way off to September 1. That’s what happened to me.

Here’s another problem: Some outgoing employers are generous and some are stingy. A couple of years ago, I had one outgoing employer give me 30 days after my last day. That’s generous. My most recent outgoing employer gave me one day after my last day, which usually isn’t enough time to make other arrangements for yourself.

There’s a difference between insurance and treatment. You can get some treatment without insurance, in a pinch. But let’s talk about all the options.

What to do about health insurance between jobs

Chances are, without lots of preparation and an insane amount of luck, you’re going to have a gap in coverage.

COBRA

A common complaint, based on the insanely high number of people who read my blog entry on COBRA, is that employers are slow to get the COBRA paperwork to them. The good news is that you don’t have to get COBRA unless you need it, and it’s retroactive. You have 60 days to buy the coverage, and if it turns out you didn’t need it, you can skip it.

What about Obamacare and the mandate that you carry health coverage? There’s a 60-day grace period in that as well. As long as your gap in coverage is less than two calendar months in a single year, there is no tax penalty for that gap.

Obamacare

Speaking of Obamacare, a.k.a. the Affordable Care Act, it’s typically much less expensive than continuing your coverage under COBRA. It may be a viable option for health insurance between jobs. When I researched it in my case, I had about 40 plans to choose from. My previous employer’s plan was comparable to a low-level Silver plan under the Affordable Care Act, but comparable in price to most of the Gold plans under the Affordable Care Act.

In our case, since we were only going to be on it for a month, we picked a Bronze plan, intending to pocket the difference. Whether we actually saved anything is questionable. My advice there is to pick an insurance provider you’ve actually heard of, and I’ll leave it at that.

Here’s the rub with Obamacare: In our case, we signed up in July, but coverage didn’t start until August 1. So it probably would have worked to our advantage to wait until the end of July, then sign up, just in case an emergency had forced us to go the COBRA route.

Don’t forget the certificate of creditable coverage

Soon after you leave your former job, you may or may not receive a certificate of creditable coverage in the mail. If you buy health insurance between jobs, that insurer probably will want a copy of that. Your new employer may want a copy of it as well. So if you get mail from your old insurance provider, don’t throw it out thinking it’s junk.

Do you need health insurance between jobs?

What if you get sick without insurance? The last time I had a gap in coverage, I didn’t care all that much because none of us got sick. This time around, three of us got sick.

One option is to just pay cash to your doctor. Most doctors will give you a discount if you pay cash up front. It’s a public service and it helps them. It’s a lot cheaper to bank cash than it is to file paperwork with an insurance company. And then they don’t have to wait months or years for the money to come in. The same thing goes for pharmacies, at least in the case of common, generic drugs. But the other thing about drugs is that, depending on what you need, your doctor may have some samples and may be able to spot you. It doesn’t hurt to ask, but make sure you’re nice about it. It’s easier to give them to a nice person than to ship them to Doctors Without Borders, but not-nice people can be rather motivating.

If you don’t have a doctor because your former doctor retired, you may have another option. (Don’t scoff. It happened to me.) The CVS pharmacy chain runs its Minute Clinic in its own stores and in Target stores, which is an in-store clinic that can provide basic medical care. Without insurance, most services run $79-$99. That’s higher than a copay to a primary doctor, but it’s much cheaper than visiting an emergency room or even an urgent care facility without insurance. If you need medicine, you’ll end up paying out of pocket for that as well, but a visit or two to the clinic still costs less than that month’s health coverage would have.

If you don’t have a CVS or a Target near you, some other chains may run similar clinics. It’s worth looking into. It’s not the best coverage in the world, but it’s likely to be your most affordable option when you’re in that gap.

What about other types of insurance between jobs?

Employers often offer life insurance or other types of coverage, and those may not kick in for you right away. I understand wanting to have insurance to protect your family in the event of something happening to you. Look into term life insurance. If you’re in reasonable health, you should be able to get a couple hundred thousand dollars worth of coverage for less than $20 a month. It’s not a bad thing to have anyway, and at that price, you may decide to keep it even after your benefits kick in.