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What Are Your Health Care Options if You’re Unemployed?

What Are Your Health Care Options if You’re Unemployed?

10 Minute Read

If you’re unemployed or between jobs, you’re not just worried about when your next paycheck will arrive. There’s that other thought in the back of your mind: What about my health insurance?

It’s easy to feel lost at sea if you’re out of work and no longer covered by your employer’s group health insurance—especially if you have a family dependent on your coverage too.  

But don’t lose hope. There are options out there to cover your health care until you’re back on your feet!

Let’s look at them now.

Health Care Options for the Unemployed

There are a few ways to cover your health care costs if you’re unemployed. They range from applying for government assistance to choosing a smart option in the private health insurance market. Let’s face it: Whether you’ve been out of work for a while or you just lost your job this week, you need to know your options, right? The good news is that there are places (and people) to turn to!

Health Care If You’ve Just Lost Your Job

Life happens. And if you find yourself out of a job that gave you employer-based health care, these are your main options:  

  • COBRA coverage
  • Government health insurance marketplace
  • Private health insurance marketplace

Let’s take a look at each of them in detail.

Do you have the right health insurance coverage? You could be saving hundreds!

Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA gives you the chance to carry on your employer-based coverage for a limited period of time after you’ve stopped working for them. Big sigh of relief, right? But here are some of the upsides and downsides to this:

Advantages of COBRA

The good thing about COBRA is that it makes it mandatory under federal law for an employer to allow employees to pay to stay on their health care 18 months after they’ve left their job. This can also stretch to 36 months if you qualify.1

Disadvantages of COBRA

The not-so-great thing about COBRA is that it does mean you’ll pay the full cost of the health insurance premium yourself. So you’ll pay more than what you saw coming out of your paycheck when you were employed because your employer was subsidizing (i.e. paying for!) some of that premium.  

Now, if this is going to break the bank, don’t worry! As we’re about to explain, you can enter the general health insurance marketplace instead. But it’s always a good idea to speak to your employer before or as soon as you leave to get the lowdown on what your new COBRA premium might be.

COBRA gives you the chance to carry on your employer-based coverage for a limited period of time after you’ve stopped working for them.

What Happens If You Change Your Mind About COBRA?

We’re all allowed to change our minds, and a couple of months of COBRA coverage might leave you thinking it’s just too expensive. Or maybe you get another job sooner than you thought you would and don’t need it anymore. What next? If you’re still without coverage and you want to leave COBRA, you can step away from it and use the general health insurance marketplace if you’re still in the open enrollment period (during November and December). But there’s also the option to qualify for marketplace coverage during a special enrollment period outside of open enrolment. We’ve got more on this further down.  

Marketplace Health Insurance

Losing your job is tough in so many ways, and it’s a major life event. But whatever the reason you find yourself out of work, you can move straight to buying a health insurance plan in the government health care marketplace.

Whatever the reason you find yourself out of work, you can move straight to buying a health insurance plan in the government health care marketplace.

This is thanks to the Affordable Care Act (ACA) of 2010 (commonly known as “Obamacare”). It gives unemployed workers the chance to apply for health care during a special enrollment period which is 60 days after you lose your employer’s health insurance coverage.2 This is a big deal if you just lost your job and have a family dependent on you for health care.

And speaking of family, when you do apply for new coverage, you’ll find out if you qualify for any savings on your premiums, tax credits or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP). 

High-Deductible Private Health Insurance

If you feel strong financially (maybe you have another source of income coming in), you could move straight into the private health insurance market to cover you and your family. And it makes even more sense if you also have a Health Savings Account (HSA) because it’s there to help with out-of-pocket costs! With an HSA, you’ll need to enroll in a plan with a high deductible, and that’s good for you because it means low monthly premiums. This is really important if you’re not sure when your next job (and paycheck) might come.  

Health Care If You’re Long-Term Unemployed or on Low Income

Even if the job market is booming, there’s a chance you could find yourself out of work for some period of time. Or you might be scraping by on a low income. But this still means you need health care. So what are your options?

There are ways to get coverage depending on how much money you’ve got coming in and the size of your household.

Medicaid

The clue is in the name: Medicaid gives aid and assistance to people with disabilities, the elderly, pregnant women, children and families on low incomes. It’s available in all states to people who qualify.

So if you do qualify for Medicaid, how does it help? Well, it can reduce your monthly health insurance premiums and other costs like copayments, deductibles and out-of-pocket bills. That’s if you’re on low income or have a family to support.3 Medicaid eligibility is based on the size of your household and your income—not your job situation.

Medicaid eligibility is based on the size of your household and your income—not your job situation.

How low does income need to be to qualify for Medicaid?

Medicaid income levels are based on the government’s federal poverty line (FPL). Now, these are dollar levels the government sets as markers to see if you’re eligible for benefits including Medicaid.

Let’s look at an example: The poverty line for a single individual is an annual income of $12,490.4 If your income is currently between 100% and 400% of this individual FPL, you’ll qualify for tax credits that lower your monthly health insurance plan.  

But what if (like many families) your total household income is too high to get Medicaid but too low to afford decent private insurance? The good news is that there’s a way to at least help the children in your household: They could qualify for CHIP. In fact, in 2018, more than 9 million children were enrolled in CHIP, and enrolment is open year-round.5

Medicare

Medicare, on the other hand, is different from Medicaid because its job is to provide hospital and medical care for some specific groups who need it: people over the age of 65 and anyone under 65 who has received Social Security disability benefits for more than two years.

Medicare also covers those suffering from the following diseases: end-stage renal disease (kidney failure) and amyotrophic lateral sclerosis (known as ALS or Lou Gehrig's disease).6

If you qualify for Medicare, your coverage will be split into Part A (hospital costs) and Part B (medical costs) along with Part D for prescription drugs. And just to make things more confusing, there’s Medicare Advantage (known as Part C) which bundles them all.

Tips If You’re Unemployed and Need Health Care

We get it. It’s impossible to predict when your job might be coming to an end, but there are things you can do to keep yourself ahead of the game and have a backup plan if you suddenly find yourself out of work and out of health insurance.

1. Start to Find Some New Coverage as Soon as Possible

Even before you leave a job, there’s nothing wrong with talking to those helpful folks in Human Resources about your health insurance benefits and what will happen to them if you leave. You’ll be able to find out how much COBRA coverage will cost you and even use this info to decide whether to stick with COBRA or go it alone in the health insurance marketplace.

2. Have All Your Important Details Ready

When you’re all set to talk COBRA or marketplace or even Medicaid, here’s the information you should have ready: your income, total household income, Social Security number, pay stubs, tax records, information about your current (or just terminated) health insurance plan and the number of dependents in your household.

3. Get Advice From an Independent Insurance Agent

Not only will an independent insurance agent use the information we listed above to figure out the best insurance plan for your budget and needs, but guess what? They’re the ones in the know when it comes to your state’s laws too. Because some states direct you to apply for government-based insurance through the federal marketplace while others have a state-based marketplace and set their own levels of eligible income. Confusing, eh? That’s when an agent steps in to make sense of it all for you.  

4. Keep Your Emergency Fund Topped Up

We’ll never tire of saying it: An emergency fund is a must whatever your situation is in life! But it’s uber-important if you’re out of work and out of health insurance coverage. Your emergency fund takes away the worry of those unpredictable trips to the doctor (or the dentist or eye doctor) and routine checkups that come with out-of-pocket costs. You know the deal: You need 3–6 months of expenses saved up separately from your other accounts. Having a fully funded emergency fund will ensure you’re able to pay for insurance during a gap period without all the stress if you find out you unexpectedly need it.

An emergency fund is a must whatever your situation is in life!

5. Think About a High Deductible Health Plan

When you do decide on the health insurance plan to replace your employer plan, aim for a high deductible. Because if you’re not sure when your next job might come along but you need some good health coverage worth its salt in the meantime, a high deductible plan makes sense. Why? Because your monthly premiums will be low, and if you also have a health savings account in place, you’ll save money on your taxes at the same time.

Ease Your Health Insurance Worries With Help From an Expert

Here’s the bottom line: An independent insurance agent will be able to gather quotes from health insurance companies across a large marketplace to find you the best deal.

Whether you’re looking for individual or family coverage or you want to see if you qualify for government assistance, being unemployed does not mean you’re out on a limb where health insurance is concerned.

And we can help you start the process with our Endorsed Local Providers (ELP) program. You’re one click away from finding friendly, local experts in the insurance field who offer good advice and peace of mind.

Find an independent agent today!

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