How Job Loss Affects Your Health and Life Insurance Coverage By Kim Kirsch Insurance Broker/District Manager, Healthcare Solutions Team
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f you lost your job in 2020, you’re not alone. Unemployment is reaching levels unseen since the Great Depression across the country, with about 30 million workers currently seeking unemployment benefits. When addressing the immediate financial emergencies that come with losing your job, it can be easy to forget the big picture. Unfortunately, even when a job loss is temporary, you may lose your health insurance and some other important benefits. While you can retain your employer health insurance for up to 18 months under a federal program called COBRA, you’ll have to pay the entire cost yourself, plus 2%. Other benefits aren’t protected under the program. This means you could lose your life insurance and disability insurance while you’re unemployed. Even if you aren’t among the millions of Americans currently uninsured, it’s a good idea to have a firm understanding of how layoffs and furloughs affect your insurance coverage. Obtaining health, life and disability insurance through your employer is often less expensive than purchasing an independent policy, and many employees depend on that coverage. Making preparations to continue your coverage can
help you navigate the uncertainties of unemployment.
Furloughs, Layoffs, and Terminations Can Have Different Effects on Your Insurance
In uncertain times, many people are figuring out there are a variety of terms that fall under the vast umbrella of unemployment. While the words are often used interchangeably, they mean different things. They can also have different impacts on your insurance coverage. To get a better understanding of the impact of job loss on your insurance coverage, it helps to understand the difference between termination, layoff, and furlough.
FURLOUGH
A furlough is a temporary mandatory leave of absence initiated by your employer. Furloughs are often a result of a slow economy or limited funds to pay employees to work full time. Typically, employees are expected to return to their original position and salary after a designated time period. If you’ve been furloughed, you’re still considered an employee of the company and may be able to retain some benefits during furlough. The purpose of a furlough is to allow a business to stay afloat through difficult times without the strain of paying employees. The expectation is that employees will return to work. Some health, life and disability plans have provisions to allow continued coverage during a furlough. Even if the insurance plan doesn’t automatically take care of furloughed employees, your employer may work with the provider so coverage can continue.
LAYOFF
A layoff is generally a separation from employment due to lack of work. While you may be called back to work when/if the situation changes, there are no guarantees. Employees who are laid off are no longer employees of a business. If your employer is confident about the potential to recall workers in the future, they may offer continued benefits for a specific period of time.
TERMINATION
A termination occurs when an employee is separated from employment and won’t have the opportunity to return to the company. This often occurs with a reduction of force due to lack of work. When positions are permanently eliminated, employees will likely have fewer opportunities to continue any type of benefits. If you have experienced any of these in the last 60 days, get with a licensed health insurance broker to see if you’re eligible for an SEP on the ACA marketplace. Otherwise, your broker should offer you a private market plan that’s somewhat less expensive and benefit rich. n
4 Harmony Life Magazine | October 2020
