How to Keep Insurance When You Leave a Job

You can take it with you. It's possible to stretch your health insurance coverage when leaving a job.

In the past, workers often found themselves without access to health-care coverage upon leaving a job. Even after they started a new job, they might be denied coverage for pre-existing conditions. Thanks to federal law, changing jobs doesn't have to be hazardous to your health.

Federal law now allows insurers to impose only one 12-month waiting period for any pre-existing condition (a condition either treated or diagnosed during the past six months). However, previous health-care coverage can reduce your waiting period (as long as you have maintained continuous coverage without a break of more than 62 days).

Here's how it works: if you've been covered for seven months in your present job, for example, you may be subject to a five-month exclusion period for pre-existing conditions when you switch jobs. Been covered for the past two months? You may be subject to a 10-month wait in a new job. But should you leave a job and not find a new job offering coverage within 62 days, you may have to wait 12 months before benefits kick in on a pre-existing condition.

Should you leave your job, take care that you don't lose your health-care coverage. Under a 1985 law known as COBRA, group health plans sponsored by employers with 20 or more employees are required to offer continued coverage for you and your dependents for 18 months after your leave your job, whether you leave voluntarily or otherwise.

Notify your employer within 60 days of your intent to continue coverage. Payment of the entire premium, up to 102 percent of the cost of the coverage, will be your responsibility.

If you work for an employer with fewer than 20 employees, you may be able to convert your group policy to individual coverage. With conversion, you may not have to pass a medical exam, although a pre-existing condition exclusion may still apply, according to the Health Insurance Association of America.

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