Health insurance after a death

Survivors get the longer period, not the shorter one

Federal law lists the events that trigger a right to continue an employer's health plan, and the death of the covered employee is the first of them. A surviving spouse and dependent children are not asking the employer for a favor; they are qualified beneficiaries with a statutory right to elect coverage.^{Source 1}

The maximum period depends on which event it was. A job loss or a cut in hours gives eighteen months. Every other qualifying event — including a death — gives up to thirty-six months. The eighteen-month figure that everyone has heard is the one that does not apply to survivors.^{Source 2}

Employers and HR departments state the eighteen-month figure by reflex, because it is the case they see most. If you are told eighteen months as a survivor, ask them to look at the qualifying event again.^{Source 2}

When the clock actually starts

The election period must run at least sixty days, and it cannot end earlier than sixty days after the later of two dates: when coverage terminated, or when the plan gave the required notice. A family that has not been notified is generally still inside its window, however long ago the death was.^{Source 3}

One election can cover the household. An election by the covered employee or the spouse is treated as an election on behalf of any other qualified beneficiary who would otherwise lose coverage, unless the election says otherwise — and where the plan offers a choice of coverage types, each beneficiary may still choose separately.^{Source 3}

Coverage elected under continuation is retroactive to the date it would otherwise have lapsed. That matters if care was received in the gap: electing later does not leave a hole, provided the back premiums are paid.

The cost problem, and the alternative

Continuation coverage is the same plan at the true price. An employer that had been paying most of the premium stops, so the monthly cost often triples or worse. Continuation coverage carries the full premium plus an administrative charge, so electing it without comparing can cost several times what the same household would pay on the marketplace.

Losing coverage because of a family member's death is expressly a qualifying life change for the health insurance Marketplace, which opens a sixty-day special enrollment period outside the usual window. Once a premium subsidy is taken into account, a Marketplace plan is often materially cheaper than continuation coverage.^{Source 4}

• Household income usually falls after a death, which can increase a Marketplace subsidy substantially. Estimate the new income, not last year's.
• Check whether the current doctors and prescriptions are covered before switching. Continuation coverage keeps the exact plan; a Marketplace plan may not.
• A deductible already met this year restarts on a new plan. Late in a year with significant medical costs behind you, continuation is often the better arithmetic.
• A survivor's own employer plan may also be an option, with its own special enrollment window.

Both windows are running at once. Continuation and the Marketplace each give around sixty days, and comparing takes an afternoon — so do the comparison in the first weeks rather than electing whatever arrives in the post.

Ending the deceased person's own coverage

Separate task, and easy to forget while the survivors' coverage is being sorted out. Coverage on the person who died has to be stopped, and premiums paid after the date of death are usually recoverable.

• Medicare ends at death. Social Security is normally told by the funeral director, and Medicare follows from that — but a Medicare Advantage plan or a Part D drug plan is a separate contract with a private insurer and should be told directly.
• A Medicare supplement policy is also a private contract, and premiums are often paid annually or by direct debit that continues until canceled.
• Ask each insurer for a refund of premiums covering the period after the death, and ask in writing.
• Do not cancel a plan the survivors are still on. Removing the deceased person is a different instruction from terminating the policy, and the two get confused.

If the person received long-term care paid by Medicaid, the state may seek recovery from the estate. That is a claim against the estate rather than against the family personally, and it belongs with the executor and probate rather than with the insurance calls.