Have you ever daydreamed about storming out of your office, dramatically shouting “I quit!” to your boss as you walk through the door? A lot of us have, and it can be tempting to put in your two weeks’ notice on a whim so you can move on to bigger and better things.
Before you quit, however, you'll need a plan for how you will meet your healthcare coverage needs while you're between jobs. In this article, we'll go over three options you should consider (are you quitting so you can pursue a career as a freelancer? Check out Working a Freelance Job? Consider These 3 Health Insurance Options for relevant information.)
Have a Plan in Place
Even if you have a powerful disliking of your job and a strong desire to finally pursue your passion, it's never wise to let your emotions dictate when and whether you should quit your job. There are several practical considerations to take into account before making the plunge, especially if your employer provides health insurance.
If you quit without a plan, the most obvious problem is that you might be left without health insurance coverage. The job market is never predictable, so there is no telling how long you it will take for you to find new employment and get on a new corporate plan. You need to be sure that your healthcare expenses will be covered, whether it's for two weeks or for two months.
There can also be penalties for letting your coverage lapse for too long. By making sure you have some insurance in place while you're looking for work, you can avoid these repercussions.
Go Over Your Options with an Agent
As you weigh the pros and cons of quitting your job, start by finding an insurance agent you trust. If you don’t have another job with health insurance benefits lined up, you’ll want to make sure you’re able and ready to pick up the tab on your own before quitting (see 5 Questions to Ask Before Choosing an Insurance Agent if you're not sure who to work with).
You’ll find that some options – including plans in the government marketplace – are priced according to your income. Those calculations are based on your entire year’s income, so if leaving your job means you’ll be taking a pay cut, make sure you select a plan you’re confident you can afford. You’ll also want to ensure that your preferred hospitals and doctors are covered under your new plan. A good agent will be able to answer your questions about each plan and guide you to the option that best meets your needs and budget.
Three Health Insurance Options After You Quit
Option #1: Stay on Your Employer’s Plan Through COBRA
Your first option for health insurance when quitting your job is to stay on your job-based plan. COBRA is a federal law that allows you to stay on your employer’s plan for a certain period of time, typically no longer than 18 months. COBRA was originally passed to protect individuals with pre-existing conditions who may struggle to find coverage after losing their jobs.
If you decide to stay on your current plan, you’ll enjoy the same coverage but will pay the full premium yourself, plus an administration fee.
Although it can be convenient to keep your current coverage, footing the entire bill yourself can also make it very costly. Make sure you’ve considered and compared all of your options with an agent before taking this route.
Option #2: Get on Your Spouse’s Plan
If you're married, check with your spouse’s employer to see whether you can be covered through their job. One advantage of this solution is that your health insurance as a family will be simplified and streamlined. You and your spouse will enjoy the same coverage and have access to the same healthcare providers.
Even if you choose not to take advantage of your spouse’s coverage, know that if the option is available to you, you will not qualify for tax credits or savings on a marketplace plan. There is, however, one exception to this rule: if your spouse’s plan does not meet affordability standards, you may still qualify for tax credits. Although this is an unlikely outcome, since nearly all plans meet those standards, even if they have extremely high premiums.
Option #3: Purchase a Plan Privately or in the Government Marketplace
Finally, you can always purchase a private plan or get one of the plans available through the government.
Health insurance available in the government marketplace must be purchased during the yearly open enrollment period. However, if you quit or lose your job, you may qualify for a special enrollment period, allowing you to purchase a plan right away. If you go with this option, you will need to provide documentation to prove you've lost your employer-provided coverage.
Your agent can help you decide between a private plan or a plan on the marketplace. Make sure you fill out a marketplace application to see if you qualify for income-based savings or tax credits. Remember to keep in mind what your income will be after quitting your job when determining which plan you can afford.
Before leaving the confines of your cubicle for good, take time to discuss your health insurance options with a trusted agent. Compare your employer’s plan to the plans available through your spouse, private companies, and the government marketplace.
The most important thing to remember is that you need to get health insurance as soon as possible. A gap in health insurance puts your health and finances at risk and could lead to a tax penalty if you wait too long to find a new plan. If you land the job of your dreams somewhere down the road, complete with a brand new job-based insurance plan, you can cancel a marketplace plan at any time without penalty.
Whatever you decide, make sure you take the time to carefully weigh out all of your options. If you commit to a plan only to find out that it's too expensive or doesn’t cover your preferred healthcare provider, you will not be eligible to select a new plan again until open enrollment.
Once you determine which health insurance option is best for you, you will be one step closer to packing up your desk and walking out of your office for the very last time.