What happens to my health insurance if I get furloughed or laid off due to the Pandemic?
Generally, a furlough is a temporary job separation so chances are your employer will continue your health insurance and you may apply for unemployment benefits. However, unfortunately furloughs often become permanent job loss.
If that happens, you have a few options. Your employer is required by law to provide you with COBRA , mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985 https://www.dol.gov/general/topic/health-plans/cobra . COBRA provides workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.
COBRA allows you to continue your health insurance for at least 18 months, and because of the Pandemic some of these limits have been extended. Private employers with at least 20 workers and an active health plan are required to make COBRA available.
However, there are a few things to keep in mind. You will be paying a lot more for your health insurance under COBRA than you previously paid through your firm’s health benefits while you were employed. You might be better off buying insurance through the Affordable Care Act exchange program. Your drop in income may allow you to benefit from a premium tax credit, which could reduce your premiums.
If you have a high-deductible plan and a Health Savings Account, (HAS), those funds can be drawn on to pay for COBRA premiums and for your medical costs. If you have a Flexible Savings Account, or FSA, you can only use those funds for medical costs.
Some employers have opted to subsidize COBRA coverage for some or all of the months, so be sure to look into that possibility. Also make sure you keep up with your monthly COBRA payments. There is a grace period in case you miss a deadline. Your firm’s Human Resources department should provide you with a package with all the rules and deadlines clearly laid out.
Stay in touch with your firm’s Human Resources department and stay current on your monthly COBRA payments to be sure you are covered while furloughed or laid off.