Can you still quit your job when you need health coverage?
Yes, you can!
How? There are differences between being an employee vs being self-employed. Your paychecks may fluctuate, cash flow might be affected month to month, you may now be a 1099 status requiring you to pay quarterly estimated taxes, and if you are over 26 and not married, most likely you will be responsible for obtaining your own health coverage solution.
A majority of self-employed professionals go without health care or pay 3x the rates. It is one of the top pain points of going out on your own and why so many people return to being an employee… they need the benefits. Prior to grabbing your belongings and walking out the office door, evaluate your healthcare options, consider the factors that come with a healthcare switch, and then live the dream and kiss that 9-5 goodbye!
Prepare Before You Quit
Start by auditing your finances.
Gather your different bills, receipts, information on loans, credit cards, bank statements, and other financial documents. You want to have an idea of how much you spend versus what you save. Create a plan for the future with the forethought of knowing you will be making a life-altering decision.
Construct a budget.
Figure out how much money you need to set aside each month for expenses like your essentials: rent, groceries, utilities, and what you truly need to survive. How much can you allot towards non-essentials? A budget will help you stay on top of your finances and know how much money you can spend without the source of income from your current job.
Evaluate Healthcare Options
You have several healthcare options for when the time is right for you to depart from your current position. You might consider short-term health plans, COBRA, marketplace plans, or healthshares.
Short-Term Health Plans: Temporary or short-term health insurance is a good option if you have a lapse in permanent coverage due to leaving or changing your job. However, they may not offer coverage for maternity, mental health, or any sort of pre-existing condition. If you suffer from some pre-existing conditions, you could be denied coverage. States such as New York, New Jersey, California, and Massachusetts currently prohibit short-term health plans.
Continuation of Health Coverage through COBRA: The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires continuation coverage to be offered to covered employees, their spouses, their former spouses, and their dependent children when group health coverage would otherwise be lost due to certain specific events. Employers or companies may require the former employee who elected the COBRA plan to pay the full amount plus a 2% service charge. This type of coverage is usually more expensive, as the former employee is now fully responsible for 100% of the health insurance costs. The length of time a COBRA plan is usually offered is 18 months.
Marketplace Plans: The Affordable Care Act (ACA) requires insurers to provide essential healthcare coverage and plans purchased through the ACA Marketplace are unable to deny coverage due to pre-existing conditions. Due to the different tiers of coverage, however, medical services can quickly become costly. While ACA plans can be useful to those with pre-existing conditions that require frequent health services, they can be expensive & impractical for those who do not. Marketplace plans also vary state by state, so something available in one state may not be available if one decides to move or has children going off to college.
Healthshares: Healthshares offer many of the benefits people expect from health care, but at a much more reasonable price than alternatives. These plans usually include concierge care, no surprise bills, and the same benefits from state to state. Families save on average 20-70% compared to traditional insurance. Healthshares are often sought out by anyone looking for a more proactive way to manage health care needs: concierge care, fair medical pricing with no surprise bills and offer the same benefits state to state. Many healthshares offer an open network to visit the provider of your choice and have a team to help you navigate your health needs, this service can drastically cut medical bills and ensure you are getting the right care at the right cost.
Read indipop’s resource Comparing Health Insurance Options to learn about the pros and cons of each healthcare option, who they would benefit, and who they would not.
Factors You Should Consider with a Health Coverage Switch
With a healthcare switch, you should consider your total out-of-pocket costs as well as the “fine print” of what is and what isn’t included. Whether that be COBRA or a healthshare, take time to review your plan or policy. What’s most important to you? Examples might be: staying with your primary care physicians, a comprehensive mental health plan, an open network for specialists, or out-of-pocket costs for monthly and major medical fees.
Quit That Job!
Now more than ever, you have options.
You are not alone in thinking you would like to finally be your own boss or test the waters with a side gig that can turn into a full-time career. 4.5 million workers quit their jobs in November, according to the most recent data from the U.S. Bureau of Labor Statistics. People are choosing to follow their dreams rather than slog away at a job they hate, and you can be one of them.
Be smart about your next steps. If you know you will be exiting your company in the upcoming year, think about your finances… and especially healthcare costs. Medical debt in the US is on the rise; more than 50% of Americans now carry medical debt. This can potentially be avoided with research and asking the proper questions to fully understand the plan you choose.
You have choices and each scenario for individuals and families is different. A plan that may work for your self-employed cousin or neighbor may not be the right fit for your budget or needs. Review your options thoroughly and have a good understanding of the monthly and annual costs, and “the worst case of what if”, what would you be responsible for if a major medical need occurs?
Now go crush some goals and fulfill those dreams!