This may come as a surprise, but nearly 50 percent of all Americans get their healthcare coverage through their employer, according to the Kaiser Family Foundation (KFF). That is why 2020 has been so devastating. With people getting laid off or losing their jobs completely because of the year’s global and economic impact, there are now millions scrambling to find affordable health insurance for unemployed individuals.
If you recently lost your job—and your job-based health insurance—then you will be in need of medical insurance. It doesn’t matter if you are young and healthy right now. Going without healthcare coverage is a major risk that you do not want to take.
What Happens When I Lose My Employer-Sponsored Health Insurance?
There are a couple of avenues available to you if you recently lost your job, were laid off, or even needed to be put on temporary leave. Since job-based health insurance requires employment to continue coverage throughout the year, the moment you lose your job, there is a limited number of days left on your health insurance policy. If you lose your job outside of the Marketplace’s open enrollment window, you have 60 days from the time you lost your employment and your medical insurance to use a special enrollment period (SEP).
Also, you can check options for Medicaid and CHIP. There are no limits on enrollment for these two programs. You can enroll at any time throughout the year. Once you have filled out a Marketplace application, you will also be informed if you are eligible for federal assistance.
Upon applying, you will get options that are based on estimated income for the calendar year. It may be difficult to estimate your income while unemployed, but consider compensation, income from all household members, and any additional income from alimony, interest, capital gain, and monetary support. Withdrawals from 401Ks and IRAs are also considered income.
Don’t Forget About Penalties
Although restrictions have eased up recently, you may still be penalized for not having qualifying medical coverage. The federal government or state government may fine you for every month that remains without insurance. There are some exemptions, including if you fall below the Federal Poverty Line, but you shouldn’t wait to find out if you are exempt or not. Search for unemployment health insurance as soon as you can to avoid penalties.
About Unemployed Medical Insurance
So, you lost your job-based health insurance. You know you have options and that your unemployment compensation is going to count as income. But what now? Although no news may feel like good news, you do have unemployed insurance options.
Your choices for health insurance for unemployed individuals include:
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
- Private health insurance carriers
- Government-facilitated health insurance marketplace
Let’s look at these options in greater detail.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Yes, it’s a lot to say, which is why it’s just referred to as COBRA. With this program, you get the chance to continue your employer-sponsored medical insurance for a limited time once you have stopped working. Now, this might sound like a blessing—but it has some disadvantages.
COBRA means you are paying a very high health insurance premium by yourself. It is the full amount of what your employer was paying, not just what was being taken from your paycheck.
That is why some people enroll in COBRA only to realize that it will break their bank account. You can step away from the program, no questions asked, and either make use of the open enrollment period for a private or Marketplace insurer, or you can attempt to get short term health insurance.
Private Health Insurance for Unemployed
If extending your employer-sponsored coverage immediately seems like too much of a financial burden to bear, you can move directly into a private health insurance policy by using the special enrollment period or open enrollment. You may even opt to get a Health Savings Account (HSA) to help reduce out-of-pocket medical costs.
You will have a slightly higher deductible with an HSA, but you also have lower monthly payments—which is reassuring when you don’t know the next time you will have a steady paycheck.
Federal Marketplace Health Insurance
The most popular of all unemployed insurance options are the policies available through the federal Marketplace. The Affordable Care Act (ACA) has given Americans a chance to find individual or family health insurance for an affordable price. Since you have lost your job and your health insurance, you will be eligible for the SEP. You may also be eligible for subsidies to decrease the cost even further.
What if I didn’t have employer-sponsored health insurance?
If you weren’t covered by your employer because you were part-time or your employer didn’t offer medical insurance, you will be in a more difficult position. You are not eligible for the 60-day window to get ACA-compliant health insurance, so you need other options.
You could join your spouse’s plan, sign up for Medicaid or Medicare, or get short term health insurance if it’s available in your state and county. Short term health insurance works well as low-cost unemployed health insurance when you need it most.
Some states have opened emergency enrollment periods during the 2020 pandemic for you to receive insurance regardless of your employment status. Visit HealthCare.gov and check if you are eligible with just your zip code.
Open Enrollment for Unemployed Health Insurance
Mentioned earlier was the special enrollment period, or SEP, that allows you to enroll outside of the official open enrollment that usually runs between November 1 to December 15, 2020.
Keep in mind that you also get 60 days to sign up for COBRA, which means you should use some time to consider both options—Marketplace insurance vs. COBRA—to see which one is right for you.
If you don’t take advantage of the special enrollment period, you will have to wait for the Marketplace to open up again.
How to Apply for Health Insurance
So, how do you apply for health insurance if you lost your job? Here are some tips to make the process a bit less hectic:
1. Find coverage options as soon as you can.
If you know that you are going to be out of work soon, then you should talk to your employer or Human Resources. During this time, you can figure out how much COBRA will cost and what other options you have. The sooner you start shopping around, the easier it will be to secure an affordable premium—especially if you have access to open enrollment or an SEP.
2. Gather your important details.
Whether you decide on COBRA or a private policy or a Marketplace plan, you will need the following information for your application: Social security number, tax records, pay stubs, your personal income, total income for your household, information about your current or previous health insurance, and how many dependents you have.
3. Consider your needs.
When evaluating unemployed medical insurance, consider your needs. For instance, some plans have a high deductible and reduced premiums, but those won’t help you at all during routine medical examinations. Short term plans are not meant for long term usage, and some states limit the term to 3 or 6 months. Think about what you need and start comparing health insurance plans from there.
4. Fill out the application.
All insurance carriers are going to have an application, regardless if you opt for COBRA or a private insurer or a policy from the Marketplace. If you need help filling out the information, contact a representative to assist you.
Get Health Insurance Today
Losing employer-sponsored health insurance can be a major blow, especially after losing your employment, too. But that doesn’t mean you have to stress about maintaining your health while you are out of work. There are plenty of options for you, no matter where you live. Now that you know about the open enrollment and special enrollment periods, make use of them. If you can’t then start searching for other options, like short term insurance or an HSA.
You don’t have to go this alone. Let us help! Compare health plans for unemployed individuals today. AffordableHealthPlansUSA.com has hundreds of affordable options, so you can get the benefits you need.