If you are newly unemployed and uninsured, you’ve got a lot on the table. Unfortunately, worrying about where you can get access to and afford health insurance is going to be one of them. It’s notable that most employers will honor insurance coverage through the end of the month in which you lose or leave your job, and there is a limited window to sign up for a new plan, so you need to move quickly. This article includes all of the legitimate health insurance coverage options for those who are newly unemployed or uninsured. You won’t find health sharing ministries and short-term junk plans on this list because they are not legitimate insurance options.
1. Get Added to your Spouse or Domestic Partner’s Employer Plan
The first option to look at for a newly unemployed or uninsured individual is the possibility of being added to your spouse or domestic partner’s insurance plan – if they have one. Losing existing health coverage is a “qualifying event” that triggers a “special enrollment period” (SEP) to allow an individual to newly register for insurance outside of the employer’s standard open enrollment period.
You may enroll yourself and eligible family members in a plan if the job loss caused you and your dependents to lose insurance. And you can also change your plan if you are adding dependents that have lost coverage. Later on, you can un-enroll a dependent if they become employed again.
A few key things to note:
- Depending on the plan, you typically have 30 to 60 days from the loss of insurance to use the qualifying event to register for new insurance under a special enrollment period – so do not hesitate to long to make the switch.
- A benefits change form and dependent information request form are typically needed as requested documentation to verify the change in coverage. Request this from the prior employer, if not automatically received.
If being added to your spouse’s plan is a possibility, it’s likely the best option. If you are eligible for “affordable” (less than 9.78% of household income) coverage under a family member’s employer sponsored plan, even if you opt to not enroll in it, you may not be able to get premium assistance on ACA Marketplace plans.
2. Keep your Employer’s Health Insurance with COBRA
COBRA is a federal law that requires extended health insurance coverage (from employers with 20 or more employees) for voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. If you are entitled to elect COBRA coverage, you must be given an election period of at least 60 days (starting on the later of the date you are furnished the election notice or the date you would lose coverage) to choose whether or not to elect continuation coverage. In the case of job loss, COBRA allows the former employee to stay on their former employer’s plan for up to 18 months (36 months in some circumstances), if eligible.
All of that may sound great, but there is a big downside to COBRA – the cost. Under COBRA, employers can (and often do) shift 100% of the premium cost (+ an additional 2% administration fee) to the former employee. And it’s estimated that employer’s cover an average of 82% of the premiums for individual health insurance plans and 70% for family plans.
If you want to see how much the premiums will be, you can do so by checking out W2, box 12, code DD to find out how much your employer and you were paying for your insurance plan (for the prior calendar year).
You have to be careful with COBRA. As a general rule of thumb, COBRA is typically best for those who have already met or are close to meeting their annual deductible towards the end of the calendar year, and not many others. The high monthly premiums are often going to be cost prohibitive, particularly compared to the other 3 options on this list.
For more info on COBRA, the US Department of Labor has a good FAQ to review.
3. Sign-up for an ACA Marketplace Plan
Outside of the ACA open enrollment period, the ACA requires a qualifying life event in order to be eligible to register for a “special enrollment period”. There are many qualifying events for special enrollment outside of open enrollment, including losing employer-based health insurance (typically within 60 days, but you may still be eligible if it was beyond 60 days and verifiably due to COVID-19).
When your income is below specified federal poverty level thresholds, you may become eligible for ACA premium subsidies and even cost-sharing reductions on out-of-pocket expenses in some cases. An ACA plan will likely be the best fit for those who are not eligible for Medicaid, Medicare, or a spouse or domestic partner’s plan.
4. Sign-up for Medicaid, CHIP (for Dependent Children), or Medicare
Depending on household income level, you may be able to sign yourself or dependents up for Medicaid or the Children’s Health Insurance Program (CHIP), which can cover eligible dependent children under age 19. If you meet eligibility requirements, you can sign up for Medicaid and CHIP at any time, and benefits begin immediately. There is no need for a qualifying event or special enrollment period – eligibility is determined based on household income and size of family (dependents).
If you are a low income individual that does not have access to a spouse or domestic partner’s employer plan, then Medicaid is likely your best and cheapest health insurance option.
You can and should visit healthCare.gov for more information on these programs, income eligibility, and to apply.
If you are age 65 or older, you should instead sign up for Medicare.
This is a really helpful article! People need this information now. There are some additional ways you can use your HSA to address financial challenges:
You can use HSA funds to pay COBRA premiums or any other health insurance premiums if you are receiving federal or state unemployment benefits. If you need cash, you can reimburse yourself tax-free from your HSA for previous medical expenses that you paid for out-of-pocket.