Lost Your Job?

Follow these steps to ensure you don't lose your health insurance and other important benefits, too.

Losing your job can be a shock. But keeping your head and following a few simple steps will help ensure you get as much value from work benefits as you deserve. Most importantly, it may also help you keep your health insurance after employer-sponsored coverage ends.

Even though you may think that your new job search should take priority, be sure to address all benefits-related issues before leaving work for the last time. Considering that just one medical crisis in the family can wipe out your savings if you are uninsured, even a short lapse in health coverage may be risky.

This Action Plan is intended to help you handle a challenging time - and hopefully avoid a few missteps along the way. Please be aware that this is an overview, not a comprehensive blueprint covering every situation.

  1. Determine which benefits can go with you:
    • Health and Dental Insurance
    • Health Flexible Spending Accounts (FSA)
    • Life and Disability Insurance
    • Pension or 401(k)
    • Cash Balance Plan
    • Profit Sharing or Stock Bonus Plans.
  2. Ask key questions before leaving:
    • Can you continue health insurance at group rates?
    • Will your former employer still contribute to premiums?
    • Can you use accrued PTO to extend paid benefits?
    • How do you activate COBRA (continuation of health coverage) and how much does it cost?
    • Are you eligible for a severance package offering:
    • Health care coverage
    • Job placement services
  3. Get documentation
    • You'll need to get proof of insurance from your employer and/or insurance company (this is known as a certificate of creditable cover
  1. Solve health coverage issues:
    • Find out when your current policy ends, to avoid gaps in coverage
    • If continuing existing plan, find out when/how payments should be made
    • Determine if coverage is available from a working spouse's employer
    • Secure new health insurance in under 63 days to avoid:
    • Higher premiums, coverage gaps or being denied coverage due to pre-existing conditions
    • Waiting periods up to 12 months for full coverage
    • Exclusions to coverage
  2. Finish Up - Create security for your job search:
    • File an unemployment claim online, or in person
    • Create a budget and spending plan reflecting reduced income
    • Review automatic investment contributions
    • Check for assistance programs at www.aarp.org/quicklink

Action Plan

While the information above suggests actions to take, you may find you need some details to actually carry them out. You'll find them here, along with helpful links, phone numbers or places to go for more information.

Negotiating Your Severance Package:

  • Check your employee handbook to find out which benefits you can take with you.
  • Carefully review your severance package before signing. Don't assume everything is set in stone. Your employer may be willing to negotiate and increase the value of your package. You may want to consult an attorney.
  • Consult your HR or benefits department for information on replacement coverage options, including COBRA, spouse's family coverage, Medicare, private health insurance, and state-based children's health plans for dependents.
  • Research coverage options via your HR or benefits department and the Getting My Questions Answered tool on this site.

Making Decisions About Health Insurance:

  1. It is important that you fully understand your coverage options before deciding which is best for you. Many options may be available, including:
    • COBRA
    • Spouse's family coverage
    • Medicare
    • Private health insurance
    • State-based children's health plan (for dependent children)
  2. To choose the best option for you, consider the following:
    • Which option(s) offer adequate and affordable coverage for my dependents?
    • What are the total costs of coverage, not just the premiums? Consider out-of-pocket expenses such as co-pays, deductibles, and seeing out-of-network providers.
    • What are the prescription costs and benefits under each plan option, especially if you, or covered dependents, have pre-existing or chronic health conditions?
    • For help weighing the pros and cons of the types of individual health insurance available to you, visit The 15-Minute Health Insurance Guide from Aetna and AARP.

COBRA

This federally-mandated program allows you to stay on your former company's health plan for 18 months after being terminated. Your coverage will not change, but your premiums will increase significantly since your employer will no longer be contributing to their cost. COBRA is available to all covered employees and dependents that were covered by the company's plan at the time of termination.
For more information, consult your HR or benefits department.

Spouse's health plan

If your spouse has the option of family coverage from his/her employer, consider enrolling yourself and any dependents currently covered by your plan. This may be more affordable than COBRA, and you should be able to get coverage fairly quickly
For more information, consult your spouse's HR or benefits department.

Medicare

If you're eligible, Medicare offers affordable, comprehensive medical and prescription drug coverage. Medicare coverage begins at age 65, but you can begin the enrollment process at age 64½. If you have a qualifying disability, you may be able to enroll earlier.
For more information, visit www.medicare.gov, or call MEDICARE (1-800-633-4227) 24 hours, 7 days a week, including some federal holidays.

Private health insurance

You may want to consider a new plan from a private health insurer. Take some time to research and compare a number of private plans. You may find coverage that better meets your needs and budget than your current plan.
For more information, contact your state's Department of Insurance, the National Association of Insurance Commissioners, or an insurance broker. To find plans that carry the AARP name, visit the Product Finder on this site.

State-based children's health programs

Most states offer coverage for uninsured children under age 18.
For more information, contact your state's .

Medication costs

Consider whether your ability to cover prescription costs is threatened by your reduced income. If so, subsidies may be available from the manufacturer of your medication.

Increasing Financial Security During Your Job Search:

  • File for unemployment compensation right away. Find links to your state's online Unemployment Resource Center at http://www.unemployment-resources.org/states?c=UF&gclid=CJzYuo_04KACFZdM5QodbihJBA
  • List all sources of income you can depend on for the next few months. If you are 62, evaluate whether it makes sense to file for Social Security. For those eligible to begin receiving retirement income from Social Security, contact the Social Security Administration for assistance with this process, by visiting http://www.aarpfinancial.com/content/YourGoals/considRet_stratsToMaximizeSS.cfm.
  • Determine what level of spending you can afford, then list all expenses in two columns: required and discretionary - and be realistic when making these lists. Remember, gas is required to get to interviews and the grocery store, but cable TV isn't.
  • Stop spending on anything that's not on your "required" list.
  • Don't stop paying your bills - ask creditors if they offer grace periods that allow you to defer payments or provide any other ways of keeping current.
  • Stop automatic investments for the time being - you can (and should) restart them when you have more income.
  • Evaluate adjusting your spouse's tax withholding for more cash now rather than a refund later - get a W4 form here http://www.irs.gov/pub/irs-pdf/fw4.pdf.
  • Check how part-time work will impact unemployment benefits before accepting low-paying, low hour jobs.
  • Get extra Help - If you aren't able to meet your expenses, don't let your debt level spiral without exhausting all potential sources of income. Check with state and religious organizations. Many offer short-term financial help for the financially challenged. Find out what public benefits you may be eligible for at www.aarp.org/quicklink. To find free or low-cost help from a certified counselor, go to www.nfcc.org.