Fact Sheet 

U.S. Department of Labor 

Employee Benefits Security Administration 

December 2008 

JOB LOSS 

Important Information Workers Need to Know to Protect their Health Coverage 

and Retirement Benefits 

The Department of Labor’s Employee Benefits Security Administration (EBSA) administers the Employee Retirement 

Income Security Act of 1974 (ERISA), which governs retirement plans (including profit-sharing and 401(k) plans) and 

welfare plans (including health, disability, and life insurance plans). ERISA also includes the health coverage 

continuation and portability provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the 

Health Insurance Portability and Accountability Act (HIPAA). This information sheet focuses on job loss and its effect 

on workers’ health and retirement benefits. 

When facing job loss or a reduction in hours, workers need to know their options ahead of time to prevent loss 

of health coverage. There may be several options available to individuals who are losing their health 

coverage when they lose their jobs: 

Special Enrollment in Another Group Plan. If other group health coverage is available (for example 

through your spouse’s employer provided plan), special enrollment in that plan should be considered. You 

and your family would be provided a special opportunity to enroll in a plan for which you are otherwise 

eligible, regardless of enrollment periods. However, to qualify, enrollment must be requested within 30 days 

of your losing eligibility for other coverage. After special enrollment is requested, coverage is required to be 

made effective no later than the first day of the first month following your request for enrollment. This type 

of coverage is usually the most cost-effective of all the options. 

COBRA Continuation Coverage. If your employer continues to operate and offer a group health plan, 

COBRA continuation coverage may be available. COBRA, which generally applies to employers with 20 or 

more employees, would allow you and your family to continue the same group health coverage at group rates. 

Your cost for coverage may be higher than what you were paying before (and is usually higher than the cost 

for coverage under special enrollment in a spouse’s plan), but generally the cost is lower than that for private, 

individual health insurance coverage. The plan should send a notice to you regarding the availability of 

COBRA coverage. After this notice is provided, you generally have 60 days to elect coverage and coverage 

would be available retroactive to your loss of coverage. (Note: Once you have elected COBRA, you won’t be 

eligible for special enrollment in another group health plan, such as your spouse’s plan, until all COBRA 

coverage available is exhausted. Therefore, it is important to consider special enrollment in another plan 

promptly.) COBRA coverage typically lasts 18 months, but may last longer in certain circumstances. 

Health Coverage Through a Government Program. Health coverage may be available if you meet 

certain qualifications through the State or Federal Governments. Information on government programs such 

as Medicaid (for low-income individuals and individuals with special needs), State Children’s Health 

Insurance Program (for children of qualified families), or Medicare (for people aged 65 and over, and for 

certain people who are disabled or have end-stage renal disease), is available through your State insurance 

department or the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid 

Services at 1-800-MEDICARE. 

Private, Individual Health Insurance. The last option to consider is private individual health insurance 

coverage. You may qualify for guaranteed access to such coverage, without any pre-existing condition 

exclusions, if: 
2

• You had health coverage for at least 18 months without a significant break in coverage (generally a 

break in coverage of 63 days or more) and the most recent period of coverage was under a group 

health plan; 

• Your group coverage was not terminated because of fraud or failure to pay premiums; 

• You were either not eligible for COBRA continuation coverage (or similar State program), or if 

eligible for COBRA coverage (or similar State program), you elected and exhausted COBRA 

coverage; and 

• You are not eligible for other health coverage. 

Even if you do not meet these criteria, you may still be able to obtain coverage. The cost of individual 

coverage is often higher than similar coverage under a group health plan obtained through special 

enrollment in another group plan or COBRA. More information on individual health coverage 

is available from your State insurance commissioner or the Department of Health and Human Services, 

Centers for Medicare and Medicaid Services at 410-786-1565 or www.cms.gov. 

Note: When considering health coverage options, you should examine the scope of the coverage (including 

benefit coverage and limitations, visit limits, and dollar limits), premiums, cost sharing (including copayments and deductibles), and waiting periods for coverage. For information on the coverage through a 

particular group health plan, you should call the plan administrator and request a copy of the plan’s 

summary plan description. 

Retirement Benefits. ERISA provides rules for those responsible for the management and oversight of 

your retirement plan. It also provides you with rights and responsibilities, including specific rights to plan 

information. If you lose your job, make sure you have a copy of your plan’s current summary plan 

description (SPD) and your individual benefit statement. If not, request a copy. The SPD tells you if and 

when you can collect your benefits or how to roll over your 401(k) account to a new employer’s plan or to an 

IRA (if your old plan permits you to do so). The individual benefit statement lets you monitor your account 

balance and is an important statement to keep on file. If your retirement savings remain in your former 

employer’s plan, keep current on any changes the company makes, including changes of address, employer 

name, or mergers and give the plan any changes to your contact information. If your benefits are in a 

traditional pension plan and your plan ends without enough money to pay the promised benefits, the Pension 

Benefit Guaranty Corporation will assume responsibility as trustee of the plan and pay benefits up to a 

maximum guaranteed amount set by law. 

The free publications listed below provide more information: 

• Retirement and Health Coverage... Questions and Answers for Dislocated Workers 

• Your Health Plan and HIPAA...Making the Law Work for You 

• An Employee’s Guide to Health Benefits under COBRA 

• What You Should Know About Your Retirement Plan 

They are available on the agency’s Web site or by calling EBSA’s toll-free number at 1-866-444-EBSA 

(3272) to request copies. If you have questions, call the toll-free number or contact EBSA electronically at 

www.askebsa.dol.gov. 

For more information on the Pension Benefit Guaranty Corporation, visit www.pbgc.gov or call 

1-800-400-7242. 

* This fact sheet has been developed by the U.S. Department of Labor, Employee Benefits Security Administration, Washington, DC 20210. It 

will be made available in alternate formats upon request: Voice phone: (202) 693-8664; TTY: 1-202-501-3911. In addition, the information in 

this fact sheet constitutes a small entity compliance guide for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.