Losing job-based health insurance: your 60-day window

Losing job-based health coverage opens a special enrollment period for a Marketplace plan. It runs from 60 days before your coverage ends to 60 days after, and it applies whether you quit, were laid off or were fired.

Timing sets your start date. Pick a plan before the old coverage ends, and the new one can start on the first day of the month after it ends. Pick one after, and coverage starts on the first of the month after you choose.

When does the 60-day window start?

The clock runs from the day your coverage ends, which isn’t always your last day at work. Many employer plans keep you covered through the end of the month you leave. Others end coverage on your last day. The date on your COBRA election notice or a letter from HR settles the question, so get it in writing before you do anything else.

Say your last day of work is August 12, and HR confirms in writing that the plan keeps you covered through August 31. Your window opened 60 days before August 31 and closes 60 days after it, at the end of October. Choose a plan by August 31 and the new coverage can start September 1, with no gap. Choose on September 10 and it starts October 1. September goes uncovered.

A few situations don’t qualify. Dropping job-based coverage while you’re still eligible for it doesn’t count, and neither does losing it because your share of the premium went unpaid.

How do you compare COBRA with a Marketplace plan?

COBRA lets you keep the exact plan you have now, with the same doctors, drug list and deductible progress, for up to 18 months after a job ends. The catch is the bill. You pay the full cost of the coverage, up to 102 percent of what the plan costs, including the share your employer used to pay, and no premium tax credit applies while you’re enrolled in COBRA.

A Marketplace plan is a new policy. Its network and drug list may be different, the deductible starts over at zero, and it resets every January 1. What it can offer is a premium tax credit based on your household’s estimated income for the year, which COBRA never gets.

Put the two side by side before you decide. Fill in each line for COBRA and for the Marketplace plan you’re leaning toward:

1. The monthly premium: for COBRA, the amount on your election notice; for the Marketplace plan, the premium after your estimated tax credit, which our plan comparison shows.
2. How much of this year’s deductible and out-of-pocket maximum you’ve already paid, and how many months are left before each plan resets.
3. Whether each of your doctors takes the exact Marketplace plan, confirmed by calling the office.
4. Whether each prescription is on the plan’s drug list, at what tier, and whether it needs prior authorization.
5. The same doctor and drug answers for your spouse and children, if they’re covered too.
6. Whether your pharmacy is in network.

The deductible line is easy to overlook. Say you had surgery in March, have already reached your plan’s out-of-pocket maximum, and your job ends in the middle of August. On COBRA, most plans keep paying covered in-network care in full for the rest of the plan year. On a new Marketplace plan, you start again at zero in September, then start over once more on January 1.

COBRA also runs on its own clock. You get at least 60 days to elect it, counted from the later of the date your coverage ends or the date the plan gives you the election notice, and then at least 45 days after electing to make the first payment. Depending on the plan’s rules, coverage can reach back to the day your old coverage ended. That’s why some people hold COBRA in reserve while they sort out a Marketplace plan. The Marketplace window keeps running the whole time, though.

Switching later is possible, within limits. You can move from COBRA to a Marketplace plan within 60 days of losing the job-based coverage, during Open Enrollment, or when COBRA runs out or your former employer stops paying its share. Dropping COBRA on your own, or letting it lapse by not paying, doesn’t open a new window.

Mid-month endings create a gap. If your employer coverage ends on the 12th, a Marketplace plan can’t start before the first of the next month. Electing COBRA for that stretch is one way to cover it, and the Marketplace window stays open as long as you’re within 60 days of the loss. Confirm the new plan’s start date before you let COBRA go.

What income goes on the Marketplace application?

The tax credit is based on your household’s expected income for the whole calendar year, not just the months after the job ended. That includes the salary you already earned this year, severance, unemployment benefits, a spouse’s income and pay from any new job you expect to start before the year ends. Many people enter only what’s left. That overstates the credit, and the difference comes back as tax owed when you file.

Say you earned $54,000 in salary through July, received two months of severance, and expect unemployment benefits through the fall. All of it counts. So does anything your spouse earns. If the total for the year is low enough, the same application checks whether you qualify for Medicaid or CHIP instead, depending on your state, and those programs take applications all year.

A new job changes the math again. If it offers you coverage that counts as affordable, you generally can’t keep the tax credit for the months that offer is open to you, so report it to the Marketplace when you get it. When the new employer’s enrollment packet arrives, our enrollment help guides walk through the forms and waivers.

What can hold up the start date?

Two things can hold it up. Coverage doesn’t start until the first premium is paid, and on the federal Marketplace you can’t use the new plan until your eligibility for the special enrollment period is confirmed. After you pick a plan, you have 30 days to send the documents that prove you lost coverage. Send them the first week, not the fourth.

What documents should you keep?

Start a folder the day you learn your coverage is ending. You’ll need some of this within 30 days of picking a plan, and the rest at tax time:

• A letter from your employer, on company letterhead, confirming the date your coverage ends
• Your COBRA election notice, which also shows the end date
• Two recent pay stubs: one with the health insurance deduction and a later one without it
• Your separation letter, showing your last day
• Severance and unemployment paperwork, for your income estimate
• The Marketplace confirmation of your plan choice and your first premium receipt
• Form 1095-A, which the Marketplace sends early next year for your tax return

When you have the COBRA premium and your income estimate in hand, compare Marketplace plans with your tax credit applied. Before you enroll, we check your doctors and prescriptions against the plans you’re considering.

Quick answers

Does quitting count, or only a layoff?

Both count. Leaving a job for any reason, including quitting or being fired, opens the window when it ends your job-based coverage.

Does the window cover my spouse and kids?

Yes, if they lose the same coverage. Everyone in your household who loses the job-based plan can enroll during the same 60-day window.

What if I miss the 60 days?

Then you generally wait for Open Enrollment, which usually runs November 1 through January 15 on the federal Marketplace, and some states run their own dates. To have coverage start January 1, enroll by December 15. Another qualifying event, like a move or a marriage, can open a window sooner. Medicaid and CHIP take applications any time.