Most Americans under the age of 65 get their health insurance from an employer. This makes life pretty simple, as long as you have a job that provides solid health benefits: all you need to do is sign up when you’re eligible, and if your employer offers a few options to choose from, pick the one that works best for you. your needs. your needs each year during your employer’s annual enrollment period.
But the downside to having employment-related health insurance is that losing your job will also mean losing your health insurance, adding stress to an already stressful situation.
The good news is that you have options, probably several, depending on the circumstances. Let’s take a look at what you need to know about health insurance if you’ve lost your job and are facing the loss of your employer-sponsored health coverage.
can i sign up for self-purchased insurance as soon as i lose my job?
If you’ve lost your job-based health insurance, you don’t have to wait for the next annual open enrollment period to enroll in a new ACA-compliant plan. You will qualify for your own special enrollment period due to the loss of your employer-sponsored health plan.
This will allow you to enroll in a plan through the marketplace/exchange and take advantage of subsidies that are bigger than ever, thanks to the US bailout.
If you enroll before your coverage loss, your new plan will be effective the first day of the month after your old plan ends, meaning you’ll have continued coverage if your old plan ends on the last day of the month.
Your special enrollment period also continues for 60 days after your loss of coverage, though you would have a gap in coverage if you wait and enroll after your old plan ends, as your new plan would not take effect retroactively .
If you’re in that situation, a short-term health plan may be a good option to bridge the gap until your new plan takes effect. Short-term plans will not cover pre-existing conditions and are not regulated by the Affordable Care Act (ACA). but they can provide pretty good coverage for unexpected medical needs during a temporary window when you would otherwise be uninsured.
cobra (or state continuation) versus self-purchased coverage
Alternatively, if cobra is available, you have 60 days to decide whether or not you want to take it. You can use this window as a bit of a cushion between your old coverage and your new coverage, because charges kick in retroactively if you choose to use it. therefore, if you have a gap of one month between the end of your work plan and the start of your new plan, you could elect to collect if you end up medically needy during that month. coverage would start seamlessly when your previous plan had ended, avoiding any break in coverage as long as you pay all premiums due.
If cash (or state continuation coverage) is available, your employer will notify you and provide information about what you need to do to activate continuation coverage, how long you can keep it, and how much you’ll pay. you have to pay each month to keep coverage in force.
If you rely on Cobra after you leave your job (instead of transitioning to a self-purchased plan on the Marketplace), you’ll have a special enrollment period when your Cobra subsidy ends. this will allow you to transition to an individual/family plan at that time if you wish.
cobra coverage vs individual market health insurance
Here’s what to consider when deciding between Cobra and an individual market health plan:
- ACA Marketplace subsidies are now available at all income levels, depending on the cost of coverage in your area (US bailout removed income limit for subsidy eligibility for 2021 and 2022 ). and the subsidies are substantial, covering most of the premium cost for most market enrollees. Unless your employer is subsidizing your coverage, you’ll probably find that your monthly premiums are lower if you enroll in a plan through the Marketplace, rather than continuing with your employer-sponsored plan.
- Have you already spent a significant amount of money on out-of-pocket expenses under your employer-sponsored plan this year? you’ll almost certainly start over at $0 if you switch to an individual/family plan, even if it’s offered by the same insurer that provides your employer-sponsored coverage. Depending on the details of your situation, the money you’ve already paid for out-of-pocket medical expenses this year could offset the lower premiums you’re likely to see in the market.
- Do you have certain doctors or medical facilities that you need to keep using? you’ll want to carefully check the provider networks of available individual/family plans to see if they are in-network (provider networks can vary significantly between the individual and employer-sponsored markets, even if the plans are offered by the same insurance company). And if there are specific medications you need, you’ll want to make sure they’re on the formularies of the plans you’re considering.
- will you qualify for a premium subsidy if you switch to an individual/family plan? If you qualify, you will need to purchase from your exchange/marketplace, as subsidies are not available if you purchase your plan directly from an insurance company. (You can call the number at the top of this page to connect with a broker who can help you sign up for a plan through the exchange.) And again, as a result of the ARP, the subsidies are larger and more widely available than usual. ; that will remain the case throughout 2022 as well.
what if my income is too low for subsidies?
To qualify for premium subsidies for a plan purchased on the Marketplace, you must not be eligible for Medicaid, Medicare Part A No Premium, or an employer-sponsored plan, and your income must be at least 100% of the federal income level. poverty.
In most states, the aca’s expanded Medicaid eligibility provides coverage to adults with family incomes up to 138% of the poverty level, with eligibility determined by current monthly income. therefore, if your income has suddenly dropped to $0, you may be eligible for medicaid and could transition to medicaid when your work-based coverage ends.
Unfortunately, there are still 11 states where most adults face a coverage gap if their household income is below the federal poverty level. they are not eligible for premium subsidies in the marketplace and they are also not eligible for medicaid. this is an unfortunate situation that those 11 states have created for their low-income residents. but there are strategies to avoid a coverage gap if you are in one of those states.
And please note that eligibility for the Marketplace subsidy is based on your household income for the entire year, even if your current monthly income is below the poverty level. so if you earned enough at the beginning of the year to be eligible for the subsidy, you can enroll in a plan with subsidies based on that income, even though you may not earn anything else for the rest of the year.
what if i will soon be eligible for medicare?
There has been a recent increase in the number of people retiring in their late 50s or early 60s, before they are eligible for Medicare. the aca made this a more realistic option starting in 2014, thanks to premium subsidies and the elimination of medical underwriting.
And ARP has increased subsidies and made them more available through the end of 2022, making affordable coverage more accessible to early retirees. That’s especially true for those whose pre-retirement earnings might have made them ineligible for subsidies in the year they retired, due to the “subsidy abyss” (which has been eliminated by the ARP through the end of 2022).
So if you’re losing your job or decide to quit and you still have a few months or a few years before you turn 65 and become eligible for Medicare, rest assured you won’t have to go without insurance.
You will be able to enroll in a Marketplace plan during your special enrollment period triggered by the loss of your employer-sponsored plan. And even if you made a pretty solid income in the first part of the year, you might still qualify for premium subsidies to offset some of the cost of your new plan for the rest of the year.
and Marketplace plans are always purchased on a month-to-month basis, so you’ll be able to drop your coverage when you finally transition to Medicare, no matter when that happens.
don’t worry, take care
The short story of all this? coverage is available and getting your own health plan isn’t as complicated as it might seem at first glance, even if you’ve had employer-sponsored coverage all your life.
You can enroll outside of open enrollment if you’re losing your job-based insurance, and there’s a good chance you’ll qualify for financial assistance that will make your new plan affordable.
You can learn more about the market in your state and the plan options available by selecting your state on this map. And there are no-cost enrollment assistants (navigators and brokers) available across the country to help you figure it all out.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinion pieces and educational articles on the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by the media covering health reform and by other health insurance experts.