Millions of Americans have lost their jobs due to the coronavirus (COVID-19) pandemic. That’s bad enough. But for most employees, losing a job also means losing employer-provided group health insurance.
Fortunately, there are many health insurance options for the newly unemployed.
Coverage through your spouse’s plan
If your spouse is working and has group health coverage through his or her employer, you may be able to enroll in the plan. This option will be cheaper than COBRA continuation coverage.
COBRA continuation coverage
COBRA is short for Consolidated Omnibus Budget Reconciliation Act. This program is a federal law that requires employers with 20 or more employees to offer their employees continuation health coverage after their employment ends. If you work for an employer with less than 20 employees, your state law may require something similar to COBRA.
Your employer must notify you about COBRA coverage. You have 60 days to sign up after losing your employer-based coverage. COBRA coverage lasts for a maximum of 18 months.
The best thing about COBRA coverage is that it allows you to keep the same coverage you had as an employee. Thus, your doctor, health plan, and medical network providers remain the same.
However, COBRA coverage is expensive. You have to pay the full cost yourself. Namely, you must pay the monthly premiums your employer paid for you and continue to pay your monthly contributions. A 2% administrative fee is then added to the total amount. If you don’t know how much your employer pays for your health insurance, ask its human resources (HR) office.
The average monthly premiums for COBRA coverage are $569 for individuals and $1,595 for family coverage. And, unlike ACA coverage (see below), there are no government subsidies to help you pay the cost. For this reason, most people who get laid off don’t enroll in COBRA coverage.
But, even though COBRA coverage is expensive, it might be a good option if you’ve already paid your deductible and out-of-pocket costs for the year. If you choose a new plan, your deductible and co-pays go back to zero.
ACA coverage (Obamacare)
For most people, Affordable Care Act (ACA) coverage is a better option than COBRA coverage because it’s cheaper. In fact, you may be able to obtain tax credits to cover much of the cost.
ACA coverage, also called Obamacare, gets its name because it started under the Obama administration. It makes individual health coverage available to all Americans—including those with preexisting conditions.
You can apply online through health exchanges (also called marketplaces) that allow you to compare available plans and prices. Some states have their own exchanges, but most use the federally run exchange at www.healthcare.gov.
Ordinarily, you may apply for ACA coverage only during the annual open enrollment period. Watch for it during November and December of each year.
However, after the open enrollment period ends, you may procure individual coverage if you have a “qualifying life event.” This includes losing your existing health insurance coverage because:
- You got laid off from your job
- You quit your job, or
- Your work hours got cut below the level required for you to qualify for employer-provided coverage.
With ACA coverage, you have to switch to a new individual coverage health plan. You’ll have to make sure that your doctor is in-network with your new policy, or you’ll have to change doctors.
ACA plans come in three price levels: bronze, silver, and gold. The more you spend, the better coverage you get. If you’re relatively healthy and don’t expect to see the doctor much, you can save substantial premiums by choosing a bronze plan.
For most, the best thing about ACA coverage is that the federal government helps pay the cost. Depending on your income, you can qualify for federal tax credits sent directly to your health insurer to help pay your premiums.
You’ll qualify for these tax credits if your annual family income is no more than four times the federal poverty level. In 2020, a family of four can have an income of up to $104,800 and qualify. An individual can earn up to $51,040.
The IRS has an interactive online questionnaire you can use to see if you qualify for the premium tax credit. It is available at www.irs.gov/uac/am-i-eligible-to-claim-the-premium-tax-credit.
The amount of your credit depends on your household size, income, and the cost of health insurance where you live. When you enroll in ACA coverage, you’re supposed to pay no more than 9.78% of your annual income for health insurance.
You can get an estimate of the credit you qualify for using the Kaiser Health Reform Subsidy Calculator. To obtain the ACA credit, you’ll need to purchase your health insurance through your state exchange.
For more information on ACA coverage, see www.healthcare.gov.
Medicaid is publicly funded health care for low income and disabled Americans. Over 50% of the newly unemployed will likely obtain their health coverage through Medicaid.
Over two-thirds of Medicaid recipients purchase care through privately managed care plans that contract with the states to provide care. Others use a fee-for-service system.
The Medicaid eligibility rules vary from state-to-state. Thirty-six states and the District of Columbia expanded their eligibility rules to cover low-income adults. In these states, you can get Medicaid if your income is up to 138% of the federal poverty level. This equates to $17,609 a year for individuals or $36,156 for a family of four.
Eligibility is based on your current monthly income, not your annual salary. So you could qualify even if your yearly income is over these levels. Also, if you’re collecting unemployment, the extra $600 per week in federal pandemic unemployment benefits is not counted for Medicaid purposes.
You can apply for Medicaid whenever you become eligible for the program. For more information and links to apply, see the Medicaid & CHIP coverage guide on heatlhcare.gov.
If you earn less than 100% of the federal poverty level and live in one of the fourteen states that didn’t expand Medicaid coverage, you may not be able to obtain any coverage for yourself. In these states, the income limits for Medicaid eligibility are much lower.
These states are Alabama, Florida, Georgia, Kansas, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Wisconsin, and Wyoming.
However, if you have children, they may qualify for coverage through the Children’s Health Insurance Program, or CHIP. For details, see https://www.healthcare.gov/medicaid-chip/childrens-health-insurance-program/.