Whether you voluntarily decided to leave your job due to burnout or were suddenly let go by company-wide layoffs, it’s common to feel overwhelmed while you navigate many unknown questions:
- How will I pay my bills?
- What happens to my retirement plan?
- Do I lose my unvested stock options?
- Most importantly: What will I do for healthcare?
Making sure that your family is properly insured is essential to preventing catastrophic medical bills from overwhelming your life and crippling your financial plan.
Here are some common healthcare options after you leave your job:
You may or may not have already heard of COBRA insurance. The Consolidated Omnibus Budget Reconciliation Act is in fact a federal law that gives workers the right to keep their employer’s group health plan even after they lose their job. Once you leave your job, you will have 60 days to enroll in COBRA insurance coverage. You will be able to use COBRA coverage for 18- 36 months, depending on the type of qualifying event you had.
So what’s the catch? It is significantly more expensive, as you are now responsible for paying 100% of the premiums, rather than just the employee portion. For example, if you were having $100 deducted from each paycheck to cover your health insurance premiums and your employer’s portion (which was subsidized by them) was $300 per paycheck, you are now paying the employee portion, employer portion, PLUS a 2% administrative fee. Your monthly medical cost just went from $200 to $816!
While this can seem unfathomable, it might make sense for some people as a short-term solution while they find a new job.
With the passage of the Patient Protection and Affordable Care Act back in 2010 (aka Obamacare), health insurance became more affordable and available to many people. Before, insurance companies were able to deny you coverage if you had preexisting conditions, like cancer.
One of the major benefits of obtaining health insurance through the government Marketplace is that you may be eligible to receive Advance Premium Tax Credits. Based on your income, you can qualify for a portion of your health insurance premiums to be subsidized by the government. You can find out if you qualify here.
It is important to note that if your income is much higher than you initially reported to the Marketplace, you may need to pay back your Advance Premium Tax Credits when you file your income tax returns.
Depending on your financial situation and family’s needs, a private insurance plan might be a better option. This is also known as going directly to a certain health insurance carrier to get coverage.
In researching your healthcare options, you might find that your long-term family doctor does not participate in the health insurance plans offered through the government Marketplace. If your income is too high to qualify for any Advance Premium Tax Credits, it could actually be more affordable to purchase insurance directly from the carrier.
It’s important to review each plan’s costs, copayments, deductibles, and services covered.
What if you don’t want to sign up for health insurance? Maybe you haven’t had a cold or sprained ankle in over 15 years, and see healthcare as a waste of money. Can you just pay for doctor’s visits out of pocket with cash?
The answer is it depends. Depending on your doctor and the service needed, paying cash can save you up to 50% of what you would usually pay through insurance. While the Federal insurance mandate was removed in 2019, a number of states have introduced state-level individual mandates.
Currently, California, Massachusetts, New Jersey, Rhode Island, Vermont, and the District of Columbia have individual mandates in place and you can be charged penalties for being uninsured.
Understanding all of your options when it comes to health insurance can save you both time and money. If you would like to work with a financial planner to walk you through your options, I would love to help you!
To learn more about becoming a client, schedule a complimentary meeting now!
Disclaimer: This blog is for informational purposes only, and should not be considered advice or recommendations. All opinions expressed herein are solely those of Amaral Financial Planning, LLC, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made to another parties’ informational accuracy or completeness. You should consult your financial advisor, tax professional or legal counsel prior to implementation.