So you gave your notice and the countdown has begun for your next career move. Congrats! Switching jobs can be exciting, but it’s important not to lose sight of a few things.
First of all, let’s talk about health insurance between jobs. In an ideal world, you’d be covered under your new employer’s plan starting on day one. But if you’ve ever switched jobs before, you know that’s not always possible.
Many employers impose a 30-, 60- or even 90-day waiting period before you can enroll in their health policy, which can leave you with a gap in coverage. That is, unless you plan ahead to keep life running smoothly from one gig to the next. Here’s how.
When you leave a job, you’ll likely sift through stacks of paperwork leading up to your last day, from exit interviews to offboarding forms. One of those papers may contain info about health coverage through COBRA (Consolidated Omnibus Budget Reconciliation Act). If so, don’t ignore it.
Passed in 1986, COBRA temporarily extends health coverage for workers of employers who meet eligibility criteria, according to the United States Department of Labor. With COBRA, you get up to 18 months of the same plan you had with your old job, at the same rate — whether you left voluntarily or by termination. But there are a couple of catches:
- Same rate, increased price: Even though you’re paying the same rate for the plan, you’ll probably pay more out of pocket now that you’re not working for your old employer. This is because many employers cover a portion of their workers’ health premiums, and when you extend coverage through COBRA, you probably won’t get that benefit.
- It’s only temporary: Don’t expect COBRA to last forever. Most employees get a maximum of 18 months of coverage before they have to find a new plan.
If your new employer doesn’t allow you to join its insurance plan until a month or more into the job, COBRA is definitely worth your consideration. It’s a fantastic benefit for people in between jobs to stay covered until the new plan kicks in, so ask your old employer if you qualify.
Check Out Short-Term Insurance
If you’re not eligible for COBRA, a supplemental policy like short-term health insurance can help, too. While they’re not full plans by the Affordable Care Act’s compliance standards, short-term plans make good interim solutions for health insurance between jobs.
Like year-round policies, short-term plans are medically underwritten, but they only provide medical coverage for temporarily — though as of October 2, 2018, their duration increased to 364 days in most states. Short-term plans may also have a few exclusions and limitations, like not covering preexisting conditions.
That said, this type of supplemental policy at least gets you enough coverage to last until you’re eligible for your new employer’s plan. Just read the fine print closely when choosing a short-term plan to make sure it matches what you need.
Plan for a Paycheck Gap
Finally, be sure to plan ahead for a paycheck gap. Depending on when your last paycheck from your old job and your first paycheck from your new job arrive, you might have some idle time when funds run low.
After all, not all employers pay on the same schedule, and what was a weekly paycheck for Job A might now become a monthly check for Job B. So budget for any gap funds you’ll need to cover essentials like rent, groceries and utilities.
That way, the countdown to your new digs can continue, and you won’t go broke while celebrating.