What happens to your health insurance during long term disability

The prospect of an illness or injury that keeps you from working and earning a living is inherently stressful. And if you're also concerned about losing your health care coverage, that can only add to your worries. But will you, in fact, lose your health insurance while on disability? The reality is it depends – on how you get coverage, the length of your disability leave, and whether that leave is covered under the Family and Medical Leave Act (FMLA), among other things. The good news is, in many situations, you will be able to maintain your medical benefits – and if not, you should have access to other health insurance options. Here's what you should know:

1. If you are covered by your spouse's employer-provided health insurance coverage

This is likely the best possible scenario because your disability or work status as a spouse shouldn't matter. As long as the employer continues to offer health insurance benefits – and your spouse pays their share of premium contributions – your coverage should continue indefinitely.

2. If you are covered under the ACA (Affordable Care Act)

Again the news here is generally positive: If you have a health insurance plan through your state’s Healthcare Marketplace, having a disability will not directly affect your coverage under the ACA. However, it may indirectly affect how much you pay for your plan. If your income drops during a long-lasting disability, you may qualify for higher subsidies that effectively lower your premiums. The HealthCare.gov subsidy calculator can help you better understand what you might pay.

3. If you get health coverage through your employer

The answer in this situation varies, because your health care benefits are tied to your employment status. If the disability ultimately causes you to part ways with your employer, then that obviously affects your benefits. However, a number of factors come into play, which we’ll break down here:

• The length of your disability matters

If you have a short-term disability, then it’s much more likely that you’ll be able to keep your benefits. For example, if you are out of work for less than 12 weeks – and your leave is protected under FMLA rules (see below) – then your employer must continue your health care benefits, even if the leave is unpaid. If you are out for somewhat longer, your employer may or may not keep your health care benefits in place. Unfortunately, if you have a long-lasting or permanent disability that keeps you from working for 6 months or longer, then there is typically no requirement to maintain your job or benefits. That means you will have to look for other health insurance options (see below).

• Your disability leave may be protected under the FMLA

As noted, FMLA requirements mandate that covered employers maintain an employee's health insurance coverage care benefits for up to 12 weeks. The employer is also required to return you to the same or equivalent job as you had before your disability leave. And while the Federal FMLA law doesn’t require paid leave, a growing number of states have Paid Family Medical Leave laws that require some form of payment while on leave. But FMLA protections hinge on whether or not you and your employer are covered under the Act:

• Employers covered under the FMLA: All private sector employers with 50 or more employees for at least 20 workweeks in the current or preceding calendar year, and all public agencies, including local, state, and federal employers, and local schools.

• Employees eligible for FMLA leave: You must work for a covered employer for at least 12 months and have 1,250 work hours in the prior 12 months at a location where the employer has 50 or more employees within 75 miles. But the 12 months of employment need not be consecutive – there can be breaks.

Finally, the disability that keeps you from working must fit the description of a "Serious Health Condition." However, if you qualify for disability benefits, in all likelihood, you will meet the FMLA's Serious Health Condition criteria.

Check your employer’s policies

It’s always important to speak with your employer's human resources department or refer to the employee handbook to understand the specific policies regarding health insurance while on long-term disability. Some employers may continue health insurance coverage in situations that are not covered by FMLA.

You have options if you lose health insurance while out on disability

If your disability causes you to lose your employer-sponsored health insurance, consider looking into the following coverage options:

• COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) typically allows employees who lose employer-sponsored group health coverage to continue under the same plan for 18 months. And when the loss of coverage is related to disability, COBRA eligibility may be available for an extended period of up to 29 months.¹ However, if your employer was subsidizing a portion of your health insurance premiums, the cost will go up, sometimes substantially. In many cases, that means the Healthcare Marketplace will be a lower-cost alternative to COBRA continuation coverage.

• The Healthcare Marketplace

Generally speaking you can only sign up for healthcare coverage on a state exchange during the yearly open enrolment period. However, losing employer-sponsored coverage qualifies you for a Special Enrollment Period to shop for a new plan -- even if you are eligible for COBRA coverage. There will typically be a number of different plan options to choose from at various price points (and, as previously noted, you may qualify for subsidized coverage, especially if your income has dropped). But note that the option with the lowest premiums may not be the least expensive for you: if you have high healthcare needs, the out-of-pocket costs of a lower-tier plan may outweigh any monthly premium savings.

• Your spouse’s insurance

If your spouse has (or is eligible for) an employer-sponsored group health plan, there’s a good chance that your loss of coverage is a “qualifying event” that allows one or both of you to join the plan. If the employer subsidizes a portion of the premiums, this may well be your most cost-effective choice.

• Social Security Disability Insurance (SSDI)

This government-sponsored plan is only for very long-lasting and permanent disabilities, and even then, it is somewhat difficult to qualify for. However, if you do get SSDI benefits, you may also be eligible to receive Medicare coverage.