As the COVID-19 pandemic continues, many people have unfortunately lost their jobs and health insurance coverage through no fault of their own. However, it’s important that everyone has access to affordable healthcare, even during difficult financial times.
In this post, we will explore your options for obtaining health insurance if you find yourself newly unemployed. We’ll define some key terms, provide critical context, examine common scenarios, and offer practical tips for securing coverage on your own.
COBRA: Stands for the Consolidated Omnibus Budget Reconciliation Act. COBRA allows you to continue coverage under your former employer’s health plan for a limited time after leaving employment, by paying the full premium plus a small administrative fee.
Marketplace/Exchange: Refers to the government-run health insurance marketplaces created by the Affordable Care Act (ACA). Individuals can purchase subsidized private plans here if they do not qualify for Medicaid. Plans are categorized into metal tiers based on how costs are split between premiums and out-of-pocket expenses.
Medicaid: A joint federal-state program that provides health coverage to low-income individuals, families, children, pregnant women, the elderly, and people with disabilities. Eligibility and benefits vary widely by state.
Short-term health plan: A type of individual health insurance plan that is less comprehensive than ACA-compliant plans. Premiums are generally lower but there may be fewer benefits and looser rules around pre-existing conditions.
It’s estimated that millions of Americans have lost employer-sponsored health insurance due to pandemic-related job losses over the past year.
While governments at all levels have worked to expand access to coverage alternatives, navigating the options can still feel daunting. A few broader points provide helpful context:
Losing job-based insurance is considered a “qualifying life event” allowing a special enrollment period on the ACA Marketplace outside of the usual open enrollment times.
Medicaid eligibility is based on income relative to the federal poverty level, which is quite limited in some states that did not expand the program. Children generally have an easier time qualifying.
Subsidies in the form of premium tax credits are available on the Marketplace for individuals/families with incomes between 100-400% of the poverty level. This can make silver plans very affordable.
Short-term plans have fewer consumer protections than ACA-compliant plans but may bridge a coverage gap in some situations if the timeline is clearly defined.
COBRA extends prior coverage but is typically expensive, so the Marketplace is a more affordable long-term solution for most people unless subsidies are not an option.
With this context in mind, let’s examine some common use cases for the newly uninsured.
Use Case #1 – Recent Job Loss
Jane was furloughed from her job as a restaurant manager in March due to the pandemic. Her employer-sponsored insurance ended after 30 days. Here are Jane’s best options:
Apply for Medicaid. Jane’s income qualifying her on the spot. If denied, proceed to the Marketplace.
Purchase a plan through the ACA Marketplace during the special enrollment period triggered by job loss. Jane would likely be eligible for premium subsidies making silver plans extremely affordable.
Consider COBRA to maintain her prior coverage while shopping marketplace options, but drop it once a new subsidized plan is chosen since COBRA would be very expensive without employer contribution.
Short-term plans are not recommended due to limited benefits and pre-existing condition issues upon later applying for comprehensive coverage. Medicaid or subsidized Marketplace plans provide better protection.
Use Case #2 – Gig Worker
James supplements his freelance photography income with rideshare driving. He has not had employer coverage in over a year. His options:
See if James’ state expanded Medicaid based on current income requirements.
Purchase an ACA plan during Open Enrollment or if a qualifying life event occurs. James would likely receive premium subsidies given his inconsistent income.
A short-term plan could be suitable to bridge gaps between jobs. However, James must make sure any pre-existing conditions are still covered upon switching to a comprehensive plan later.
Consider establishing an LLC to potentially qualify for small business tax credits on the SHOP Marketplace in the future if photography work grows. But individuals plans through the regular Marketplace will suffice for now.
Use Case #3 – Early Retirement
Sally, 58, recently chose to retire from her job earlier than planned due to stress from the pandemic. She has no other income. Her path:
COBRA will extend Sally’s employer plan for up to 18 months, but will be very pricey without the company contribution.
Sally can apply for Medicaid depending on whether her state expanded it for adults over 50 without children.
Enroll in a Marketplace plan during her special enrollment period. At her age, she will find affordable plans even without subsidies due to lower premiums.
If still working a part-time job later, make sure to report any income changes to avoid tax penalties at filing time that could result from overestimating her projected annual income.
Now that we’ve looked at common scenarios, here are some final tips for successfully obtaining coverage on your own:
- Start your search on HealthCare.gov to compare all available local options in one place, including Medicaid. Have tax documents ready for subsidy estimates.
- Consider health savings accounts (HSAs) if choosing high-deductible non-subsidized bronze or catastrophic plans to take advantage of tax benefits.
- Carefully review insurer provider networks for the doctors you need. Switching plans later can cause gaps in care if doctors don’t participate.
- Check pharmacy formularies if taking ongoing prescription medications. Some plans cover certain drugs better than others.
- Apply expeditiously to avoid gaps in coverage during qualifying life event periods that last 60 days. Retain health records and prior authorization approvals.
- Consider telehealth for ongoing primary care once a PCP is chosen to maximize access while saving on transportation costs without employer perks.
- Keep an eye out for any future special enrollment opportunities that could newly qualify you for Medicaid expansions or Marketplace subsidies.
With preparation and diligence, there are viable pathways to securing affordable healthcare even in the absence of an employer plan. The combination of Medicaid, Marketplace options, and short-term bridges (where suitable) aim to leave no one helpless in times of transition.
Planning ahead will serve you best.
In conclusion, losing job-based coverage should not mean losing access to comprehensive health insurance.
By understanding your eligibility for programs like Medicaid, the cost-saving opportunities of Marketplace subsidies, and appropriate uses of temporary options, it is absolutely possible to gain control over your healthcare situation during periods of unemployment or job instability.
With the right information and quick action during special enrollment windows, informed consumers can successfully maintain vital coverage through life’s unpredictable changes.