Laid Off? You Have 62 Days to Get Health Coverage, So Here's What to Do

A layoff doesn’t have to be the end of health-care coverage.

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Nearly two million American jobs have been lost in the past year, and hundred of thousands of people will likely be laid off or have their hours scaled back in 2009. If you think you might be one of them, know this: You're almost certain to lose your employer-sponsored benefits with your full-time job. That's why you need an action plan, stat. Make sure you know your health-insurance rights and options, because once you get that pink slip you have no time to lose. Here's what you need to do within...

…One hour
You’re stressed and scared, and not in any mental state to make decisions. Take a few minutes to collect yourself and relax as much as possible. Take slow, deep breaths. In the coming days and weeks you’ll have to make a slew of decisions regarding your health care and personal finances, and you’ll need to stay calm.

…One day
Whether security is waiting to walk you out the door or you have time to clean out your desk, grab the paperwork related to your employer-issued benefits. Carefully read over the fine print on your contract and the terms of your health-insurance plan. Then ask someone from human resources:

• Am I entitled to a severance package?
• When exactly will my health benefits expire? (Some health plans expire on the day you are laid off; others might continue until the end of the month.)
• Is there any room for negotiation? (You may be able to exchange severance pay for extended health benefits.)
• Do you have any advice for me? (A sympathetic HR employee can be your best ally.)

Don’t leave without asking for a certificate of creditable coverage. This document includes the dates that your health insurance began and ended, and proves that you were covered during that time. You’ll need this to apply to other health-insurance plans.

…One week
If your health benefits haven’t expired yet, make doctor’s and dentist’s appointments for you and your family. Refill prescriptions. Try to squeeze in as much health care as you can before the expiration date, because it will almost certainly be more expensive once you lose your employer-provided insurance. If your doc is booked, explain your situation and ask to be notified about cancellations. Sounding desperate can’t hurt.

Plan to spend down your flexible spending account (FSA), if you have one, on new glasses, cold medicine, acupuncture—on whatever you can, so your former employer doesn't get to keep your hard-earned savings. Unlike health savings accounts (HSAs), which are portable from job to job and roll over, FSAs are always administered by your employer and must be spent by the end of the company’s “plan year” (plus a 2 ½-month grace period).

…One month
Enroll in your spouse’s employer-sponsored plan, if you can. Under the Health Insurance Portability and Accountability Act (HIPAA), you and your dependents can do this ASAP, without waiting until the next enrollment period. Here's the catch: You must request this so-called special enrollment within 30 days of losing your previous health benefits.

…Two months
If you're single or can’t get covered by your spouse, sign up for a COBRA extension. Under the Consolidated Omnibus Budget Reconciliation Act, you and your family have the right to extend your current health plan for up to 18 months after you are laid off. (If your former employer has fewer than 20 employees, you may not be eligible for a COBRA plan.) You will have to pay for 100% of the coverage rather than sharing the cost with your employer, but it is still usually cheaper than buying an equivalent policy on your own.

Keep an eye on the mail. After your employer notifies the insurer that you’ve been terminated, the insurer must inform you of your COBRA rights in writing within 14 days. Once this notice is sent by your insurer—not once you receive it—the clock starts ticking: You have 60 days to enroll in the plan. (If your existing coverage expires after the notice is sent, you have 60 days from the expiration date.)

…62 days
And we really mean 62 days. Under HIPAA, if you go without health insurance for 63 days or more, you will be subject to a preexisting-condition exclusion. When you enroll in a new health plan, the insurer can exclude from coverage any health condition—cancer, heart disease, diabetes—for which you received treatment in the six months leading up to your enrollment. This exclusion period can last for up to 12 months (or 18 months if you join the health plan late), but you can offset it by producing your certificate of creditable coverage, which you remembered to ask for on day 1. If you can prove that you’ve had continuous health insurance for more than 12 months without a gap of 63 days or more, the new health plan will not be able to impose a preexisting-condition exclusion.

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