Gaps in Health Insurance Coverage: Causes and Solutions

You depend on insurance to afford health care. But there are certain situations that may cause a gap in this coverage. Without insurance, a doctor’s visit, prescription, or one-off emergency room visit will cost substantially more and may throw your budget off track as a result. Below are a few situations to look out for so you can either avoid them or navigate them with greater ease.  

Situations that may cause a lapse in health insurance coverage 

Over half of all Americans have employer-sponsored health insurance coverage.1 This means any change in employment can lead to a loss or gaps in coverage, such as: 

• Starting a new job. If you leave your current place of employment for another, you may experience a gap in coverage that lasts days, weeks, or potentially even months. This may be the case if your new position doesn’t start right away or if the employer has a waiting period, like 60 days, before you qualify for insurance coverage. 
• Working fewer hours. The Affordable Care Act requires employers to offer health insurance to any employee working 30 hours or more a month. If you qualified for this in the past but are now unable to meet this number of hours for whatever reason, you may have the option to stay on your plan through COBRA continuation coverage. Learn more about this in the next section. 
• Job loss. In addition to a reduction in hours worked, getting fired from or quitting a job makes you eligible to “pay to stay” on your employer-sponsored health insurance through COBRA. Note that an employer does not have to extend this option to you if you were dismissed for gross misconduct.

Solutions after losing insurance coverage 

Alternative coverage 

You are entitled to elect COBRA continuation coverage if you meet three basic requirements: 

• The group health plan you were on is covered by COBRA. 
• A qualifying event, such as a reduction in hours or job loss, occurred. 
• You’re the qualified beneficiary for the event. 

If your situation checks all the boxes above, you have 60 days to elect coverage. If you do, an employer is within their rights to charge you the full cost of coverage plus an administration charge up to 2%. Unsurprisingly, this means you can expect the cost of your coverage to go up. This, plus COBRA continuation coverage not being a long-term solution, may not make it the best choice for you – you’re only eligible to use it for up to 18 months. Use this guide from the U.S. Department of Labor to learn more. 

Another option is to look for a plan through the Health Insurance Marketplace, which is operated by the federal government. You’ll have to supply your income and household information when applying. Through the Marketplace, you’ll have access to individual or family health insurance plans compliant with the Affordable Care Act (ACA), colloquially referred to as Obamacare. 

Health savings accounts (HSA)

If you have health savings account (HSA), now is the perfect time to use these tax-advantaged funds to pay for qualifying medical expenses for you, a spouse, or a dependent. 

• Did you know you can open an HSA through some banks or credit unions so long as you have a high deductible health plan (HDHP)? The best HSAs have no monthly fees or account minimums and provide access to funds through a debit card.

To open or contribute to an HSA you must have an HDHP. If you discontinue coverage or enroll in another plan that disqualifies you from an HSA you can't continue making contributions to the account. As well, you cannot be enrolled in Medicare and make contributions to an existing HSA or open a new HSA. Visit IRS.gov to learn more about eligibility requirements and contribution limits. Reach out to a qualified tax professional for additional guidance.  

Here at General Electric Credit Union (GECU) we recognize the importance of affordable health care and the impact it can have on a family’s budget. That’s why we offer resources that get you in the job search mindset as well as fee-free HSAs available to members with an HDHP. Visit us online to learn more about opening a tax-advantaged HSA or HSA certificate, including additional HSA qualification information.