Q. I recently lost my job, and with it, my health insurance. But I was just hired for a new job and fortunately, I will be eligible for health benefits. The only drawback is that there is a waiting period. If I enroll in marketplace coverage that starts February 1, can I drop that coverage when I become eligible for my employer’s plan?
A. Yes, you can certainly do that. The loss of your previous employer-sponsored health plan is a qualifying event, so you have a special enrollment period during which you can pick a new marketplace plan to cover you until your new employer’s plan takes effect. When you enroll in an individual health insurance policy (through the marketplace or directly through an insurer), you’re on a month-to-month contract. So you can cancel anytime, effective at the end of the month.
Health insurance carriers generally do not allow pro-rated cancellations, so you likely will not be able to contact your carrier on the 10th of the month and have your coverage canceled immediately and get a refund for the remainder of the month. So, for example, if your new coverage begins on September 15, you would most likely be canceling your individual policy as of September 30. But the insurance offered through your new job is likely to start on the first day of a calendar month, making the transition easy.
If you’re eligible for a premium subsidy in the Marketplace, your eligibility for that subsidy would end once you become eligible for your new employer’s health plan, assuming the plan is considered affordable and provides minimum value. It’s also important to understand that Marketplace premium subsidies have to be reconciled with the IRS when you file your tax return, and your eligibility is ultimately based on your total income for the year — which might differ from what you projected when you enrolled. If your new job will significantly increase your total annual income, you might not end up being eligible for subsidies during the months you were between jobs. Here’s how subsidy reconciliation works after the year is over.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
