Figuring Out Health Insurance When Changing Careers: Here's What You Need to Know

Many people make the mistake of forgoing health insurance when changing jobs or careers because of the high expense involved. What they don’t realize is that one serious accident or illness could wreak financial havoc.

Key Takeaways

Many people make the mistake of forgoing health insurance when changing jobs or careers because of the high expense involved. What they don’t realize is that one serious accident or illness could wreak financial havoc.

Despite the fact that clinics and hospitals are trying to make self-pay more affordable when there are no other alternatives available, it could still drain your savings rapidly. We don’t need to explain to you how important those savings are when you change careers and deal with a lot of other uncertainties.

In this article, we will show you how to keep health insurance when switching careers and what are some good options out there that may be right for you.

It’s true that changing careers whether you are in your 20s, 30s, or 40s is a considerable risk.

Changing careers, however, has incredible rewards associated with it, which is why people go for it. 

Many Americans have improved their financial standing and quality of life by finding a new career that gives them better earnings, perks and/or is aligned with their goals in life.

So we don’t want to discourage you from changing careers, but instead, help you understand what your options are when you are suddenly told you will no longer be covered by medical insurance after you quit your current job.

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This gap in employer-sponsored benefits may not be a huge source of worry if you're in good health and won't need any medical attention during this period. 

But if you have a chronic illness that necessitates frequent doctor visits or if you end up requiring medical aid after an accident while you're between jobs, out-of-pocket medical expenses can seriously strain your finances.

You can also lose life insurance and retirement assets in addition to employer-sponsored health insurance. 

However, with careful planning, you can prevent a coverage gap in your health insurance or other benefits when you finally resign and go for that big career change.

Download Checklist " 10 Simple Steps to Smooth Job Change"

Health insurance when changing careers

Outside of war, there are very few instances in history when mankind has been so disrupted in their lives as we have recently been during the Covid crisis. 

A regular unfortunate feature during these two years has been heavy layoffs along with high numbers of job and career switching.

Many people switched from industries that were majorly impacted by the pandemic and even now continue to do so. 

Another possibility is that even though you started a new job, you do not get covered by health insurance until you have spent a specific time with the new organization.

On a related note, if you are planning to change careers but don’t know where to start, read this excellent article on the subject.

One of the things you should bear in mind when changing careers, going into business for yourself, or participating in the gig economy is health insurance. 

Most people don’t realize that they can still enjoy the comfort and peace of mind that come with affordable health insurance even if they are in between jobs. 

Through the Health Insurance Marketplace, you may now get high-quality coverage that is affordable thanks to the Affordable Care Act. 

You can also find out at the Health Insurance Marketplace if you and your family are eligible for Medicaid or tax credits to help with the cost of purchasing insurance.

Approximately 156 million Americans, or roughly 49 percent of the nation's total population, have employer-sponsored health insurance, also called group health insurance, according to recent data from the Kaiser Family Foundation (KFF).

Besides insurance, there are many other considerations when changing careers. You should also consider going through our special guide on affording a career change.

A patient with a doctor in his office
Photo by Los Muertos Crew from Pexels

Health insurance lapses between jobs

When someone loses their health insurance between jobs, this is referred to as a health insurance lapse. 

This can occur for a number of reasons, such as quitting a work that offers health insurance or losing a job. 

A lapse in health insurance may seem like a minor problem, but it can have major repercussions. Individuals who lack health insurance are liable for covering all of their out-of-pocket medical expenses.

A worker's entire family might lose their health insurance overnight if they quit or get laid off. In order to avoid any gaps in coverage, anyone who encounters a lapse in coverage should take action as soon as possible to get new coverage. 

Individuals who require health insurance coverage have a variety of options, including short-term health insurance plans, government-sponsored health insurance programs, and private health insurance plans. 

So what should we do in order to minimize coverage disruption and maximize benefit? Depending on your location, income level, and circumstance, you have a variety of possibilities. This is mainly owing to the Affordable Care Act or Obamacare.

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How can you receive health insurance between careers?

Before we talk about this, if you are serious about changing careers, you should hear what the professionals say. 

Our two popular guides: 6 Best Podcasts for Changing Careers and 7 Best Books for Changing Careers are great resources on the subject.

The first thing you need to figure out is when your former company will stop providing insurance. It may:

  • Stop providing coverage the minute you resign.
  • Hold off till the month is out.
  • Cover you for several months… Many employers offer this if you get downsized or are asked to leave for any other reason. The number of months you get covered varies from company to company.

Once you are made aware of the date that your former employer's insurance will expire, you should immediately start making plans for what to do next.

If you have already applied successfully for a new job then find out from the new employer when that coverage starts. 

It's possible that the time you spend without insurance will only be a few days or weeks. 

In such a situation, you might choose to temporarily forgo health insurance or sign up for a short-term health plan. 

For the rest of the people seeking health insurance while between jobs, there are several options available. 

Let's examine each type of unemployment health insurance and weigh the advantages and disadvantages.:

1. Join your spouse's health insurance plan.

If it's possible, joining a spouse's plan is typically the simplest choice.

In most cases, switching insurance plans is only possible during open enrollment. You can alter the benefits of your health insurance during the open enrollment period. A spouse can also be added to a health plan during this period.

However, certain life circumstances, such as getting married, having a kid, or leaving your job, qualify for a special enrollment period. You and your spouse are able to modify or add insurance during this unique enrollment period

If you choose to join your spouse's health insurance plan, your spouse must talk to their employer about available options, purchase a policy, and add you to the plan. A plan's rates may increase dramatically if you are added to it, especially if your spouse switches from single to family coverage.

Advantages: The ability to continue in a group plan is advantageous because it is usually less expensive than switching to individual insurance or COBRA.

Disadvantages: Your spouse might have to pay significantly more for health insurance.


For a long time when Americans lost their jobs and needed gap insurance before they were able to enroll in more affordable health insurance, the Consolidated Omnibus Budget Reconciliation Act of 1996 (COBRA), was one of the few practical solutions available.

People now have a way to purchase coverage under their employer-based group health plan thanks to COBRA. People who leave their jobs must have this choice available from employers with at least 20 employees.

You get to keep your current insurance plan for 18 months if you choose COBRA health insurance. However, its high cost is a downside. 

The typical annual family premium for an employer-sponsored health insurance plan is expected to cost over $22,000 in 2020, according to the Kaiser Family Foundation. Most of such expenses are covered by employers.

However, if you choose a COBRA health insurance plan, you will also be responsible for an administrative fee of up to 2%.

You have 60 days to decide whether to keep the COBRA insurance provided by your former employer.

Advantages: You get to temporarily keep your corporate health insurance.

Disadvantages: The cost will be significantly more than the health insurance provided by your prior company.

3. ACA exchanges and individual insurance

In the past, only young, healthy people could afford individual health insurance. Individual health insurance premiums were previously determined by your health status and any existing conditions. 

For those who were not in perfect health, this resulted in exorbitant premiums. A pre-existing ailment may even cause an insurer to refuse to provide health insurance coverage.

That changed with the Affordable Care Act (ACA). Health insurers must now accept you regardless of your health status, and if you're not in ideal health, you won't have to pay astronomically higher premiums.

An individual plan, often known as nongroup insurance, can be purchased from a health insurer directly or through the ACA exchanges.

Plans are separated under the ACA by level. The amount depends on the premiums, out-of-pocket expenses, costs that the insurer will cover, and the contribution from the member:

  • Bronze: The typical health insurance payment under this plan for medical services is 60%. You pay 40%
  • Silver: The typical health plan payment is 70%. You pay 30%
  • Gold: The average health plan pays 80%. You make 20%
  • Platinum: On average, a health plan pays 90%. You provide 10%

This means that if you select a Bronze or Silver plan as opposed to the others, you will pay lower premiums but greater out-of-pocket expenses. 

While Platinum and Gold have the highest premiums, they also have the lowest out-of-pocket expenses.

The costs of ACA plans are typically greater than those of employer-based health insurance. However, many participants in ACA plans might not notice a rise in premiums. 

To combat excessive costs, the ACA offers tax credits and subsidies with ACA insurance. Even more significant help is offered in California. The health insurance will estimate subsidies depending on your income when you are looking for an ACA plan.

Advantages: Plans include protections under the ACA, including the 10 essential health benefits, including maternity, outpatient care, and prescription medications.

Disadvantages: These plans may be more expensive than those provided by employers.

4. Short-term health plans

For the majority of Americans, short-term health plans provide an affordable method to cover the time between employment.

"Short-term medical insurance is a sort of health coverage that is valid for a set period of time. The majority of states permit 30- to 364-day short-term medical plan terms, according to John Bartleson, owner of Health Benefits Connect, a company with its headquarters in Englewood, Colorado. 

These plans are excellent for those who are between jobs as well as students, self-employed individuals, and contract workers. However, there are few short-term benefits. The plans come at a high out-of-pocket expense. 

Americans are allowed to have a one-year short-term plan that can be twice extended. Therefore, the duration of these short-term plans is three years.

However, some states forbid short-term plans altogether, while others only permit them for a period of three or six months.

These plans are not subject to ACA regulations. Therefore, the 10 necessary health benefits are not required to be offered by short-term plans. 

Prescription medicines, mental health care, and maternity are typically not covered by short-term insurance policies. Each and every one of those services would require payment from you.

When you're between employment, these plans can act as a stopgap, but they can be pricey if you end up requiring medical attention.

Advantages: Affordable premiums.

Disadvantages: Exorbitant out-of-pocket expenses, little coverage, and prohibition of short-term plans in several areas.

5. Medicaid

Your eligibility for Medicaid may be determined by your income and place of residence. Low-income Americans are covered under Medicaid.

The main reason that millions of formerly uninsured people now have health insurance since the ACA is that thirty-eight states expanded Medicaid. People whose incomes are up to 138% of the federal poverty line are covered by the Medicaid programs in those states. For a family of four, that works out to nearly $35,000.

Visit the Medicaid website for your specific state to apply for coverage.

Advantages: Affordable choice with low out-of-pocket expenses and consumer protections.

Disadvantages: You must meet income limits and it could be difficult to locate a physician who accepts Medicaid.

6. Alternatively, you can also apply for Medicare if you're 65 or older

When a person turns 65 or has been receiving Social Security Disability Insurance benefits for at least 24 months, they are eligible for Medicare.

The federal government's health insurance program known as Medicare provides medical coverage for the elderly and disabled citizens of the United States.

With this program, you may relax knowing that your medical expenses will be covered in your later years. Two options: Original Medicare or Medicare Advantage are available to Medicare recipients.

  • Original Medicare: Part A (hospitals) and Part B (physicians) make up Original Medicare. Prescription drug insurance is not provided by Original Medicare, but it is available through Part D plans.
  • Medicare Advantage: Medicare Advantage (Part C) plans, which integrate hospital, physician, and prescription medication benefits and may also include additional benefits like dentistry and vision, are usually offered by private insurance firms.

Advantages: Medicare has very low monthly costs

Disadvantages: Hospital stays can still be very expensive.

The Children's Health Insurance Program (CHIP)

One other option that we must discuss that focuses on your children. If you want an option that specifically covers children then CHIP is your best bet. 

Children who qualify for the Children's Health Insurance Program (CHIP) can receive medical care through Medicaid and other independent CHIP programs. States are responsible for managing CHIP in accordance with federal regulations. The federal government and the states each provide funding to the program

For a child to be qualified for CHIP, they must be:

  • Under the age of 19
  • Uninsured (found ineligible for Medicaid, and not covered under a group health plan or creditable health insurance) (determined ineligible for Medicaid, and not covered through a group health plan or creditable health insurance)
  • Either be a citizen or satisfy immigration requirements,
  • Resident in the state where applying
  • Eligible within the state's CHIP income range based on family income, as well as any other state-specified requirements in the CHIP state plan.
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Final thoughts

Health insurance for you and your family during unexpected medical crises or anticipated hospital stays is an important necessity. Just like with any significant life decision, health insurance also requires you to strategize when you plan to change careers. 

While between careers. you must get health insurance in order to protect yourself from unanticipated medical expenses which could create havoc with your financial planning. 

To ensure your protection at all times, think about joining your spouse’s insurance plan, purchasing a personal or private health insurance plan, or any of the other options we have listed for you above.

We have also shared the advantages and disadvantages of each option to help you weigh all of your choices in order to make a wise decision. After all, changing careers has shown to result in significant benefits to your life and you should not be discouraged from it simply because you are afraid of the insurance costs involved.

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Frequently Asked Questions

Is health insurance necessary in between a job change?

How do I get health insurance when I change jobs?

How do I get health insurance if I work for myself?

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