5 tips to help employees maintain healthcare coverage after layoffs

January 5, 2023 1:57 PM

You've just been laid off. What happens to your healthcare coverage?

It's a question workers across the country have pondered in recent months — and more will undoubtedly have the same concern in 2023. Nearly 100,000 tech workers lost their jobs in mass industry layoffs throughout 2022, according to Crunchbase. Already this year, Amazon has announced plans to eliminate 18,000 jobs. Industries from manufacturing to financial institutions are feeling the economic crunch as well, with recent job cuts hitting Goldman Sachs and Morgan Stanley.

While the elimination of a regular paycheck is the obvious and primary concern following a job loss, figuring out how to continue and afford healthcare coverage is an additional stressor. In navigating healthcare options and regulations, workers often don't know where to turn for guidance.

"When people get laid off, they don't really trust their employer anymore," says Brian Lacher, VP of employee benefits at advisory Nielsen Benefits Group. "So when an employer then says, 'Hey, here's your health insurance option,' they don't really care. There's a lot of frustration and sensitivity."

Benefit advisers are positioned to bring clarity and trust to this process, Lacher says, and he encourages workers to connect with brokers to understand all options available to them. Ask tough questions, get clarity on cost and coverage, and choose a healthcare plan that suits your needs, now.

"Benefits are generally confusing, and when you don't have the best support for questions around health insurance and COBRA, my heart goes out to people," Lacher says. "If an employer is going to be generous and human about layoffs, they have a responsibility to help their employees understand what their options are, and to educate them about their broker resources."

Lacher spoke to EBN to share his insight and advice on how to proceed following a layoff — and how to make sure you're accessing the right information, and making the right decisions around your healthcare.

Consult advisers to understand COBRA coverage

An employer has 14 days to share continuation of health coverage (COBRA) notifications and rights with an employee who's been laid off. Once those materials are shared, ask an employer for access to a benefits adviser to help you understand the options available, and really understand what COBRA coverage entails.

"People often don't realize that COBRA coverage is the exact same plan they had, just with the cost redistributed," Lacher says. "Step one is really reviewing existing COBRA options, costs and plans, and from there you can decide if it's right for you. An insurance broker is a neutral source."

Read more:

Tech layoffs will create new hurdles for Black STEM talent. Can the industry refocus DEI efforts?

It may also be worth attempting to negotiate the terms of your departure, Lacher says. While larger companies' systems are likely set in stone, smaller businesses may be more willing to meet former workers in the middle.

"At a smaller company where there's maybe a more paternal approach, ask if they can cover your health insurance for some time, or provide a stipend to help you cover COBRA costs," Lacher says. "It's a basic trick: just ask."

Explore and compare all available options (and costs)

"Most people don't realize how much their employer is paying for their health insurance, so they see the COBRA and they're like, 'Oh crap, I have to pay 102% of the premiums? Whoa,'" Lacher says.

But especially for healthy people who don't necessarily need the benefits of a low-deductible insurance plan, a cheaper individual plan may be available.

"People are often under the notion that they can't change plans outside of open enrollment, but a layoff is a qualifying event, so technically, they're eligible," Lacher says. "Most people really need an adviser to put all these pieces together: Here's the employer option. Here's an individual option. Here's a state option. If you're not an expert in healthcare, that consultation will really help you feel confident in making the best decision."

Read more:

5 tech sectors hit hardest by layoffs

As you're making decisions, Lacher urges employees to be mindful about current care providers — and whether or not they're covered under your new selections.

"That's where employees can get tripped up — in how different networks work under different health insurance plans," Lacher says. "I encourage employees to pay very close attention to that when they're going through the COBRA experience. If keeping your providers is important to you, make sure they're in-network."

Consider your calendar for potential cost savings

Following a layoff, workers have 60 days to make a decision when it comes to COBRA.

"A lot of people will roll the dice and say, 'I'm not paying $2,000 a month for health insurance, why don't I wait a month and see what happens, see if I can get a job lined up quickly," Lacher says. "If they were hospitalized for some reason or had to visit the ER during that time, they can retroactively implement COBRA until that last day of eligibility. Personally, that would cause me worry and concern, but a lot of people take that chance."

Read more:

U.S. health spending edges past $4.3 trillion as COVID drags on

Don’t overlook your HSA

"People truly forget about their HSA accounts," Lacher says. "Don't forget those dollars."

Particularly for younger, healthy workers who may have been on a high-deductible health plan through their employer — all while squirreling portions of paychecks into an HSA account that their employer was also contributing to — those hundreds or thousands of saved dollars can be a valuable bridge to continued care after a layoff.

"Those funds can be used to pay for COBRA premiums," Lacher says. "Instead of dipping into your savings account or bank account, use this money you've already set aside, take advantage of those tax savings you've already utilized."

Ask prospective employers about what they offer

As you hunt for new jobs, don't feel sheepish about asking interviewers to talk you through benefits offerings early in the game, Lacher says.

Read more:

Incentive payment is critical for value-based purchasing

"Applicants might not want to come off as greedy, but there is a way to comfortably ask potential employers: 'What does your benefits package look like, and when does health insurance begin?'" he says.

Explaining that you're currently on COBRA can help them understand the financial importance of your question — and may open the door to more flexible coverage options.

"Interviewees need to ask HR when they can become eligible for benefits, and if there's any possible way to expedite that."