I just got let go due to a reduction in force, and today’s my last day. I haven’t signed the severance agreement yet because I’m still discussing one detail. The company is supposed to cover COBRA for 3 months, then I’d pay for the next 15 months. But what happens between now and signing the agreement? Is there a gap in coverage? Should I look at buying insurance today just to be safe? And if I do, can I cancel it once the severance goes through?
This is new to me, and I just realized I might not have coverage as of tomorrow.
COBRA actually works retroactively from your termination date, so you won’t have any lapse in coverage. With 3 months of employer-paid COBRA, then 15 months where you’re responsible, I’d try to find a new job during that initial period.
Take it easy! Getting 3 months of COBRA coverage paid by your employer is a pretty good deal. Stick with it to keep the coverage you’ve had—getting new insurance now would reset your deductible.
Are you thinking of finding another job in the next few months?
Yan said: @Tobin
Actually, I’m planning to start my own business temporarily. It’s not a long-term thing but should cover expenses for now.
If you don’t have any urgent medical needs, you could let the coverage lapse for a bit. COBRA lets you apply retroactively, so if anything serious happens soon, you could still activate it. If that feels risky, go ahead and pay for COBRA, but either way, you’ll want to explore a new insurance plan for next year during open enrollment. Depending on where you are, you might even qualify for extra options since you lost your job. In places like WA, they do that.
COBRA can be pricey—expect something around $1,000 a month just for yourself, and more if you have a family. Once COBRA expires, you can check out plans on your state’s healthcare marketplace. If you get a job before COBRA runs out, you can always cancel whatever you’ve signed up for.