Alyssa Lane
There are several options for individuals who are unemployed and need health insurance while they look for work. In the US, employer-sponsored health insurance covers the largest number of working-age individuals, but job loss can result in a loss of health insurance. Fortunately, there are multiple alternatives available, including marketplace plans, Medicaid, and COBRA continuation coverage. The cost of health insurance varies based on factors such as age, location, coverage level, and health status. Understanding key terms like deductibles, copayments, and coinsurance can help individuals make informed decisions about their healthcare expenses.
| Characteristics | Values |
|---|---|
| Private or commercial health insurance | Can be available through an employer, but can also be purchased directly from an insurance company or through an agent |
| Job-based health insurance | If the employer's plan meets a minimum coverage standard and is considered "affordable", you won't qualify for a premium tax credit if you buy a Marketplace insurance plan instead |
| Losing job-based health insurance | You have 60 days to enroll in Marketplace coverage |
| Marketplace plans | May be more affordable than you think; most people qualify for savings |
| Medicaid | Provides free or low-cost health coverage to some low-income people, families and children, pregnant women, the elderly, and people with disabilities |
| CHIP | Provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance; covers pregnant women in some states |
| COBRA | A federal law that allows you to maintain health coverage temporarily after your employment ends; you pay 100% of the premium |
| Deductibles | The amount you're responsible for paying before your insurance starts to cover costs |
| Out-of-pocket maximum | The total amount you pay for covered services before the plan covers your eligible costs |
| Copayments | Fixed amounts you pay for specific services, like doctor's visits or prescriptions |
| Coinsurance | A percentage of the cost you pay after meeting your deductible |
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What You'll Learn
Job-based health insurance
In the US, a majority of people under the age of 65 have health insurance coverage through an employer-sponsored health plan, either from their own job or through a family member. This is known as employer-sponsored health insurance (ESI). However, not all employers offer health insurance to their employees. As of March 2023, 80.8% of adult non-elderly workers worked for an employer that offered ESI to at least some employees, and 75.3% of workers were eligible for ESI at their job.
With most job-based health insurance plans, the employer pays a portion of the premiums, and the employee's contribution is paid on a pre-tax basis. In 2024, employers paid an average of 81% of an employee's premium, while the remaining 19% was covered by the employee. Federal law requires certain protections for people in job-based group health plans. For example, individuals and their family members generally cannot be denied eligibility or benefits, or charged more than similarly situated individuals because of a health factor under an employer-sponsored group plan.
If you leave your job and lose your job-based health insurance, you can buy coverage from your state's health insurance marketplace. You can apply online, over the phone, or in person, and you have 60 days to enroll after losing your previous coverage. You can also find out if you are eligible for financial help or coverage under your state's Medicaid or CHIP. Additionally, COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows you to maintain health coverage temporarily (18-36 months) after your employment ends. However, you may be required to pay the full monthly premium, including any part previously contributed by your employer, plus a 2% administrative fee. The average COBRA premium ranges from $400 to $700, plus the fee.
If you are unsure whether you can afford coverage, marketplace plans may be more affordable than you think, and most people qualify for savings. The cost of your plan will depend on the type of plan and where you live. Plans are typically categorized by metal names, with bronze plans offering low premiums but high costs when you need coverage, and gold and platinum plans offering high premiums but low costs when you need care.
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Marketplace insurance plans
If you are unemployed and have lost your job-based health insurance, you can apply for a Marketplace insurance plan. These plans are available to those who have lost their job-based health coverage and offer savings based on your household income. You have 60 days after losing your job-based health insurance to enrol in a Marketplace plan.
Marketplace plans must meet essential health benefit minimum requirements. However, specific services covered in each broad benefit category can vary based on your state's requirements. Some states require insurers to cover additional services and procedures. All plans in the Health Insurance Marketplace include vision coverage for children.
If you are unsure whether you can afford a Marketplace plan, you can apply to find out if you qualify for savings. Savings are based on your household size and your estimated income for the year you need coverage. You can also apply to find out if you qualify for Medicaid or CHIP, which provide free or low-cost health coverage to low-income people, families, children, pregnant women, the elderly, and people with disabilities.
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Medicaid and CHIP
Medicaid and the Children's Health Insurance Program (CHIP) provide free or low-cost health coverage for some people with low incomes, families and children, pregnant women, the elderly, and people with disabilities. Each state has its own requirements and benefits, and in all states, CHIP provides low-cost health coverage for children in families that earn too much to qualify for Medicaid.
Medicaid eligibility depends on a combination of income, age, health, and individual needs. Some states have expanded their Medicaid programs to cover all people below certain income levels. Some Medicaid programs pay for care directly, while others use private insurance companies to provide coverage. Even if you weren't enrolled in Medicaid at the time you received medical care, it may be able to help you pay for that care, depending on your family's income.
If your income is too high to qualify for Medicaid, your child may still be eligible for CHIP. CHIP qualifications differ in every state but generally depend on income. CHIP covers medical and dental care for children and teens up to the age of 19.
To apply for Medicaid or CHIP, you must be a resident of the state where you are applying for benefits. You can create an account with the Health Insurance Marketplace and fill out an application. If it looks like anyone in your household qualifies for Medicaid or CHIP, your information will be sent to your state agency, and they will contact you about enrollment.
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$13.67 $15.39
COBRA continuation coverage
In the United States, health insurance is often tied to one's employment. Private or commercial health insurance can be available through an employer, but it can also be purchased directly from an insurance company or through an insurance agent. This means that losing your job can also mean losing your health insurance.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that allows employees to maintain their health coverage temporarily after their employment ends. COBRA is a continuation coverage that gives workers and their families who lose their health benefits the right to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances. These circumstances include voluntary or involuntary job loss, reduction in hours worked, transition between jobs, death, divorce, and other life events.
COBRA coverage must be offered by group health plans sponsored by employers with 20 or more employees in the prior year. The coverage generally lasts for 18 to 36 months, though it is meant to be a temporary solution while you find other health insurance options. The cost of COBRA coverage can be high, as you may be required to pay the entire premium for coverage, up to 102% of the cost to the plan, plus a 2% administrative fee. The average COBRA premium ranges between $400 and $700.
To enrol in COBRA coverage, you must meet certain eligibility requirements and enrol within 60 days of your employer-sponsored benefits ending. Your dependents (spouse, former spouse, or children) are also eligible for COBRA coverage, even if you do not sign up for it yourself.
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Private or commercial health insurance
Commercial health insurance plans are typically sold by for-profit insurance carriers, although some non-profit organizations also offer coverage. They are regulated and overseen by state insurance commissions and must follow federally mandated guidelines. Common types of commercial health insurance include Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs), which are the most prevalent. Other types of commercial insurance plans include point-of-service plans, exclusive provider plans, and fee-for-service plans.
The cost of commercial health insurance depends on the type of plan chosen and the location of the policyholder. The cost is usually shared between the employer and the employee, with the employer paying, on average, 81% of the premium and the employee contributing the remaining 19%. However, if purchasing coverage without employer or marketplace discounts, the costs can be significantly higher.
When considering commercial health insurance, it is essential to evaluate your specific needs, financial constraints, and social life. Factors such as coverage, premiums, deductibles, and additional benefits should be carefully considered to choose a plan that suits your requirements and budget.
In contrast to commercial health insurance, private health insurance is typically purchased by individuals directly from an insurance company or agent. It offers more flexibility and customization to meet an individual's unique needs. Private insurance plans often have higher premiums than commercial plans but provide more comprehensive coverage and lower out-of-pocket costs when medical care is needed.
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Frequently asked questions
You can apply for a Marketplace plan, Medicaid, or CHIP. You have 60 days after losing your job-based health coverage to enroll in Marketplace coverage. You can also apply for COBRA continuation coverage, which allows you to maintain your previous health insurance plan temporarily.
You can purchase private or commercial health insurance directly from an insurance company or through an agent. You will need to shop around to find a plan that suits your needs and budget. Plans vary in their premiums, deductibles, copayments, and coinsurance.
You may qualify for income-based government programs such as Medicaid or CHIP, which offer free or low-cost coverage. You can also look into cost-sharing reductions, such as Silver plans, which are now available premium-free at incomes up to 150% FPL.
Yes, you may be able to get coverage through a family member's plan if you lose your job. Most plans allow family members to be added, especially if they lose their coverage.
If you work part-time or as a contractor, your employer may use a QSEHRA or ICHRA to help with your individual health insurance premiums instead of offering group coverage.
