In addition to the loss of income, losing your health insurance is another significant downside of being laid off. Luckily, there are a few options available if you ever find yourself unemployed and in need of medical coverage, although each option has its drawbacks that range from stingy coverage to high premiums.
Here are five ways to get health insurance coverage if you lose your job.
1. COBRA (Consolidated Omnibus Budget Reconciliation Act) Coverage
COBRA allows the recently unemployed to stay on their employer health insurance plan for up to 18 months. The option includes dental and vision coverage as well. However, there’s a big catch: COBRA coverage is almost always more expensive because your former workplace will no longer be subsidizing any of the premiums.
For example, let’s say that your ex-employer’s health insurance coverage costs $1,000 a month. However, while you were employed, you only had to pay $250 a month, and the company picked up the remaining $750 a month. Unfortunately, now that you are no longer employed with the company, you will be on the hook for the entire $1,000 a month.
Even worse, you will have lost a significant portion of your income, making it even harder to afford COBRA coverage.
2. Spouse’s employer-sponsored plan
If you have a spouse who has their own employer-sponsored health insurance, you might be able to join their group plan. In fact, the premiums might be a lot less than paying for COBRA coverage. Furthermore, since losing your employer’s coverage qualifies you to sign up for health insurance plans outside of the typical open-enrollment period, you would be allowed to join your spouse’s plan anytime during the year.
3. Affordable Care Act marketplace plan
Losing your employer-sponsored health coverage also qualifies you for special enrollment in the Affordable Care Act marketplace. Therefore, you could buy an individual or family private health plan through the marketplace. Plus, depending on your household’s size and income, you might qualify for premium tax credits and/or cost-sharing subsidies that will make your coverage more affordable.
4. Medicaid coverage
Medicaid is a public health program that offers free or low-cost medical coverage to low-income Americans. Eligibility is based on your household’s total income. However, the program considers your current monthly, not annual, income for eligibility. Therefore, if you have become recently unemployed, you might qualify for Medicaid coverage if your household’s income has significantly declined.
5. Short-term health insurance
Finally, if you find yourself without an employer-sponsored health plan, you could purchase a short-term medical plan. These alternative insurance options are available year-round, regardless of whether you qualify for a special enrollment. While these plans offer much cheaper monthly premiums than traditional health insurance, the downside is that they provide much less coverage.
For example, you typically can’t get coverage for pre-existing conditions, maternity care, and mental health assistance. Therefore, you need to make sure that you aren’t leaving yourself vulnerable by choosing a short-term medical plan.
In short, if you lose your job and health insurance, you might be tempted to go without any insurance to save money. However, that can be a big mistake – especially if you find yourself needing medical care with no way to pay for it. Therefore, you should carefully consider the above-mentioned options to select the best one that fits your health and wellness needs, as well as your budget.