Whether you lose your job or quit, the weeks and months afterward can be a challenge. Maybe you’re spending your time looking for a new full- or part-time job. Or thinking about launching your own business.
There’s also the question of health insurance. It’s not a good idea to have a gap in healthcare coverage, especially when you’re unemployed. If you were to have a health emergency or an unexpected diagnosis, that could get pricey quickly.
The good news is you have multiple opportunities to get health coverage, even when you’re unemployed — but it can take a bit of research and shopping around, and you’ll only have a relatively small window to make up your mind.
Here are 5 options for health coverage if you’re unemployed — along with some additional considerations to help you make an educated choice for your situation.
Looking for individual or family coverage while you’re out of work? Check out your health plan options online now.
1. COBRA
COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, isn’t a type of health plan but a federal law. It allows you to keep yourself, your spouse, an ex-spouse or your children on your former company’s group health plan, even after you leave your job. That means you can continue seeing the same providers and using the same facilities you did when you were still working.
Generally, COBRA applies to companies that have health coverage for at least 20 employees. Some states also have their own version of COBRA laws for businesses with fewer than 20 employees.
But COBRA comes with some pros and cons. On the pro side, it’s convenient to continue seeing the providers you know and are comfortable with. That may be more so if you have a health condition, like diabetes or cancer, where you have to see multiple providers on a more frequent basis.
On the other hand, coverage is limited to between 18 and 36 months — so it doesn’t last forever. And your insurance costs tend to be higher than they were when you were on the job. That’s because you’ll have to pay the full monthly insurance bill (premium), plus a potential 2% administrative fee. And because many companies pay a percentage of your health insurance, you’d have to cover 100% of the cost while on COBRA.
2. Affordable Care Act (ACA) plan
Another option might be shopping for a health plan on the federal Health Insurance Marketplace website or your state’s exchange. You can also buy a plan through a private insurance company and get help from a licensed insurance agent (you can call 1-844-211-7730 for more information).
These plans offer essential health benefits, including things like preventive care, prescription drugs and coverage for hospital stays. You may also qualify for a premium tax credit, based on your income. That can make an ACA plan even more likely to fit your budget.
Most people have to wait until the annual Open Enrollment Period (OEP) to sign up for an ACA plan. (Typically, OEP runs from November 1 to January 15.)
But if you leave or lose your job and the health insurance with it, you’ll qualify for a Special Enrollment Period, or SEP. That opens a 60-day window in which you can shop for a new health insurance plan. (In some cases, you may have 60 days before leaving your job to apply.) The only catch is you’ll have to have proof that you lost your job.
Another thing to consider: ACA plan premiums typically cost less than continuing with COBRA. These plans can also last a lot longer than 18 to 36 months, if you continue renewing your plan. You might also get a new job during that time, too.
3. Medicaid or Children’s Health Insurance Program (CHIP)
Depending on your income level, you may qualify for Medicaid. That’s a federally and state-run insurance program that provides free or low-cost health coverage to:
- Families and children
- Older adults
- People with disabilities
- Pregnant women
- Some low-income people
Many states have expanded their Medicaid programs to cover all people below certain income levels.
CHIP, which stands for the Children’s Health Insurance Program, is a federally and state-run insurance program that provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private health insurance. In some states, CHIP can also cover pregnant women.
Each state has its own income limit to receive Medicaid based on a percentage of the federal poverty level, which is $15,650 for an individual and $26,650 for a family of 3.
4. Catastrophic health plan
If you’re under 30 or qualify for an affordability or hardship exemption, you can opt for a catastrophic health plan. You’d be eligible for an affordability or hardship exemption if you dealt with things like the following:
- You experienced domestic violence
- You experienced the death of a family member
- You filed for bankruptcy
- You got a shut-off notice from a utility company
- You were evicted
- You were homeless
One of the upsides of these plans is that they have low monthly premiums. But that means they also have very high deductibles (that’s what you pay before the insurance company starts to pay for covered services).
Catastrophic plans cover essential health benefits, including certain preventive services. They’re designed to protect you from high medical costs in the event of a serious illness or injury. They’re most appropriate for people who are young and healthy.
If you have a high deductible to meet, fixed indemnity insurance plans can help with out-of-pocket expenses. Enter your ZIP code to start browsing your options today.
5. Short term health insurance
Let’s say none of the first 4 options on this list describes your situation or appeals to you right now. You’d rather just get health coverage right away while you make up your mind about your future options.
That’s where short term health insurance can help. It’s a type of temporary option, with 3 months + 1 month extension for a maximum coverage period of no more than 4 months in most states, which you could get quickly, often within a day. It’s generally less expensive than other types of health plans — but it does come with a catch.
Short term health insurance plans don’t follow the same rules as ACA plans. So, if you have a preexisting condition, you could be denied coverage. Short term plans also offer limited types of preventive care, like a prostate screening or mammogram. They are also medically underwritten. Short term health insurance does not meet all federal requirements to qualify as “minimum essential coverage” and the plans don’t include all the essential health benefits.
What other insurance options do I have when I’m unemployed?
In addition to the options listed above, you might also consider:
- Joining your spouse’s health insurance. If you have a spouse with health insurance, you can be added to their plan. You’d qualify thanks to the SEP you got for leaving your job. This can be a cost-effective and convenient option, especially if your spouse’s plan offers good coverage.
- Supplementing a traditional health plan. Let’s say you decide to go with COBRA or an ACA plan. You can buy supplemental insurance plans — ones that you pay extra for monthly — that provide additional coverage for specific needs. (There is a monthly premium for supplemental insurance that is not included in what you’d pay for your primary health insurance.) Here are some to consider:
- Dental insurance. This covers dental services, like routine cleanings and dental X-rays, and can be purchased as a stand-alone or as part of a bundled plan.
- Vision insurance. This covers things like routine eye exams and offers an allowance for glasses and/or contact lenses.
- Fixed indemnity insurance. If you went with that catastrophic plan — or decided on another type of plan with a high deductible — this type of plan could be a good option for you. (You might also see it called “fixed benefit health insurance” or “hospital and doctor insurance”)
It provides a fixed benefit to help you with qualified out-of-pocket medical expenses, like doctor visits, prescriptions and hospital stays. After your claim is filed for a qualified expense, the benefit is paid directly to you (or your provider) to help pay some of what you owe.
- Hospital insurance. You might see this called “hospital indemnity insurance,” too. It provides you with a preset benefit if you have either a planned or unexpected hospital stay. That could be something like $1,000 a day, for instance, for a certain number of days you’re in the hospital.
If you have any of the benefit left over, you can use it on things like rent/mortgage payments, childcare and more.
What type of insurance should I get if I’m unemployed?
The best type of insurance for you depends on factors like your age, financial situation and health status. For example, not everyone is eligible for a catastrophic health plan. Ask yourself: Do you have enough saved away to cover a monthly premium or a certain deductible level? And if you have a preexisting condition, it’s probably not a good idea to apply for short term health insurance.
If you have any other questions about eligibility or whether a specific plan may be a good fit for you, you can talk to a licensed insurance agent. Call one at 1-844-211-7730, or browse your plan options online.
For informational purposes only. This information is compiled by UnitedHealthcare, and/or one of its affiliates, and does not diagnose problems or recommend specific treatment. Services and medical technologies referenced herein may not be covered under your plan. Please consult directly with your primary care physician if you need medical advice.
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