Yes, your employer can usually still terminate your job and take away your health insurance if you’re collecting disability insurance benefits and can't work, though the law entitles you to some protection.
Can you keep your health insurance while on disability?
It depends on how you get health insurance and how long your disability keeps you out of work.
If you have health insurance through the Health Insurance Marketplace or coverage from a spouse or partner’s work plan, you’ll be able to keep your health insurance even if you can’t return to work.
But you’ll lose your work-provided health insurance if you’re out of work for more than a few months and lose your job. Companies may have to abide by some rules to allow you to take time to recover from an illness or injury, but you probably won’t be able to keep your job and your health insurance coverage indefinitely.
Can you keep your spouse’s health insurance while on disability?
If you get your health insurance through a spouse or partner’s plan, then good news: you should still be able to get coverage while you’re collecting disability benefits.
Since it’s your spouse and not you who’s responsible for their share of the premiums, you both should continue receiving coverage even if you’re collecting disability benefits from an individual long-term plan.
Can you keep your Health Insurance Marketplace plan while on disability?
If you bought health insurance through the Affordable Care Act’s Health Insurance Marketplace (also called Obamacare), you should be able to keep your health insurance while collecting disability insurance benefits. Since you’re paying for the plan yourself, your coverage should continue as long as you can pay for it.
Depending on your plan, you may have to pay more out of pocket if you have a lot of doctors appointments or more medical expenses. You may also qualify for tax credits and cost-sharing discounts if your disability keeps you from working and causes your income to drop.
Disabilities and coverage from Medicaid or Medicare
It’s possible to qualify for health care through Medicaid and Medicare if you’re receiving disability benefits, but it’s not always a given.
In most states you automatically qualify for health insurance through Medicaid if your disability makes you eligible for Social Security Disability Insurance (SSDI) benefits. [1] After 24 months on SSDI benefits, you may be able to sign up for Medicare even if you’re not 65.
But if you’re getting benefits from a private long-term disability insurance policy and you’re not also eligible for SSDI benefits, you’d have to rely on a Marketplace plan or insurance through a partner or spouse since you wouldn’t automatically be eligible for Medicaid.
When can your employer cancel your health insurance while on disability?
Your employer is allowed to terminate your employment and cancel your health insurance while you collect disability benefits, but when you’ll lose your coverage may depend on the length of your disability and your company’s extended leave-of-absence policies.
Under the Family and Medical Leave Act, many employees can use up to 12 weeks of unpaid leave a year without being fired (and losing health insurance). This means you likely wouldn’t lose your health insurance if your disability keeps you out of work for a few months, though you’ll still pay your health insurance premiums during this time.
If your disability keeps you out of work for months or years (or you can never return to work again), your employer can terminate your employment and health insurance once any protected or company-provided leave is up.
How does the Family and Medical Leave Act work?
The Family and Medical Leave Act (FMLA) is a federal law that entitles qualifying workers to take up to 12 weeks of unpaid leave without being fired or losing benefits. The FMLA provides leave for things like:
The birth of a new baby
Adopting or fostering a child
Caring for an immediate family member while they’re sick or injured
Your own illness or injury
When you come back to work after taking FMLA leave, you’re entitled to return to the same position you had with all of your benefits intact.
In order to take FMLA leave, you have to meet certain qualifications, like being at your job for at least 12 months and working at a company with 50 or more employees.
Does the ADA protect you at all?
Kind of. If your employer offers extended leave to other employees and allows them to keep their health insurance, the Americans with Disabilities Act ensures you have those same protections if your disability necessitates a leave. [2] If you think you may be being discriminated against at work, consult a lawyer or legal professional.
Does disability insurance cover healthcare costs?
Yes, but not directly. With a private or individual disability insurance policy, you can use your disability insurance benefits just like your regular income, which means they can pay for your mortgage, utilities, groceries, and even your health insurance premiums.
That said, you still have to pay your premium, copays, deductible, and other healthcare costs yourself — your disability insurance doesn’t do it for you.
→ Read more about how your health and disability insurance work
Options for healthcare while you’re on disability
If your disability prevents you from ever returning to your job again, you’ll likely lose your work-provided health insurance. You have a few options for health insurance while on disability:
ACA Marketplace: You can choose the type of plan you want on the Affordable Care Act Marketplace. You might even qualify for various tax credits and cost-sharing opportunities. This is best if you get disability benefits from a private plan.
Social Security Disability Insurance: Only about a third of applicants get approved for SSDI benefits, but if you do you’ll receive a small amount of money each month and get access to Medicaid and Medicare.
Medicaid and Medicare: You automatically qualify for Medicaid if you get SSDI benefits, and after 24 months you can apply for health insurance through Medicare regardless of your age.
COBRA: A COBRA plan is really only an option right after you’re terminated, but it essentially allows you to keep your work-provided health insurance by paying out of pocket. These plans are temporary and expensive, so it’s probably only best as a last resort.
Frequently asked questions
When is it illegal for my employer to fire me while I’m on disability?
Depending on where you work, it may be against the law for your employer to fire you while you’re on disability insurance. But these protections are usually temporary.
Can I be terminated when I’m on workers’ compensation?
Yes, your employer can fire you if you’re collecting workers’ compensation benefits and can’t return to your job. You can’t be fired just because you make a workers’ compensation claim, though.
What if I’m on disability and can’t afford healthcare?
If you’re collecting disability benefits from a private plan, you can apply for coverage from the Affordable Care Act Marketplace. If your income is low, you might be eligible for tax credits that will make policies more affordable. Medicaid — which is for individuals with very low incomes — may also be an option.
