An unexpected job loss—or even an expected one—is tremendously stressful. Learn about all you health insurance options and relieve your stress!
Health Insurance Options
It’s not just the lost income that hurts. Losing the valuable health benefits that your family relies on can also be a great source of stress.
Fortunately, if you’ve lost access to your health plan due to job loss, or if that loss is imminent, you still have several possible health insurance options:
- You can choose to enroll in COBRA continuation coverage.
- You can take advantage of a special enrollment privilege and enroll in a new Marketplace individual or family coverage plan.
- You can enroll in a health sharing plan.
- You can join your spouse’s employer plan, if he or she has one. However, you may have to wait until your spouses’ employers’ open enrollment period to do so.
- You can enroll in Medicaid or Medicare, if you qualify.
Let’s examine each of these health insurance options in more detail, as well as the pros and cons of each.
Health Insurance Option #1: Join Your Employer’s COBRA Plan
The term “COBRA” is an abbreviation for the Consolidated Omnibus Budget Reconciliation Act.
That’s the federal law that allows you to continue your employer-sponsored health insurance coverage for a limited period after certain qualifying events.
These events include job loss, reduction in work hours, or other qualifying life events that result in the loss of health insurance coverage.
Normally, when you choose COBRA coverage, your former employer stops paying your group insurance premium. Instead, you pick up both your employee portion and your former employers’ portion of the premium, plus a small administrative charge.
Not all employers are subject to COBRA, and not all employees may qualify for coverage. Small businesses with fewer than 20 employees are generally exempt from providing COBRA.
Advantages of COBRA Health Insurance:
- Continuity of Coverage. COBRA allows individuals to maintain the same health insurance coverage they had while employed, providing a sense of continuity and avoiding disruptions in healthcare.
- Familiar Network of Provider. With COBRA, individuals can generally continue to see the same healthcare providers and use the same medical facilities, which can be important for those with ongoing health needs.
- Comprehensive Coverage. COBRA typically offers the same level of coverage as the employer-sponsored plan, including medical, dental, and vision coverage. This can be advantageous for individuals who want to maintain their existing benefits.
- Pre-Existing Conditions. COBRA coverage cannot deny individuals based on pre-existing conditions, ensuring that those with ongoing health issues can still access necessary medical care.
Disadvantages of COBRA Health Insurance:
- Cost. COBRA coverage can be expensive, as individuals are responsible for the full premium, including the portion that the employer previously covered. This additional premium can be a significant financial burden for those transitioning between jobs. What’s more, the Obamacare subsidies don’t apply to COBRA coverage. If you elect COBRA, you’ll have to pay the full premium.
- Limited Duration. COBRA coverage is temporary and typically lasts for up to 18 months (or longer in certain circumstances). After this period, individuals need to find alternative health insurance options, which can be challenging.
- No Employer Contribution. Unlike when employed, employers do not contribute to the cost of COBRA coverage. This means individuals bear the full cost, which is often higher than what they paid while employed.
Do COBRA Plans Qualify for a Subsidy Under Obamacare?
No.
Some employers will help subsidize COBRA premiums after a layoff as part of a severance package. But you won’t get an Affordable Care Act Subsidy of any kind for your COBRA coverage.
This is another reason why COBRA coverage is usually very expensive compared to going out and finding a new individual or family plan that’s qualified under the ACA.
Does Being Offered a COBRA Plan Disqualify Me for a Subsidy?
No.
Depending on your income and the size of your household, you may still qualify for a subsidy under the Affordable Care Act, even if you had the option of a COBRA plan.
Compare Pricing on the Best Insurance Plans Available
Health Insurance Option #2: Use Your Special Enrollment Period
Under the Affordable Care Act, certain life events such as marriage, divorce, relocation, and job loss qualify you for a 60-day special enrollment period.
This allows you the guaranteed right to join a health insurance plan outside of the usual open enrollment period (November 1st through January 15th, in most states), regardless of your medical history or pre-existing conditions.
In some instances, you can even apply up to 60 days in advance if you know ahead of time when your coverage will end.
Once you finish your application, you might need to provide documents to prove your eligibility for the special enrollment period.
You can choose a plan when you apply, but you won’t be able to use your plan until you confirm your eligibility and make your first premium payment.
One of the important advantages of using your special enrollment period to join a marketplace plan, rather than taking COBRA coverage, is that Marketplace plans may qualify for a subsidy.
This will reduce your out of pocket costs if you make less than about 400% of the federal poverty line for the size of your household.
When Does Your New Plan Become Effective?
Normally, your new Marketplace coverage begins on the first day of the month after you pick your new plan.
If you apply before losing your current coverage, in places like HealthCare.gov, you can select the first day of the month when the triggering event happens (like losing your health coverage).
When Should I Choose COBRA over an Obamacare Plan?
In most cases, you’ll be better off taking advantage of your Special Enrollment Period and shopping around for a new Marketplace health plan rather than taking the COBRA coverage.
This is especially true if your income is low enough to qualify for an Affordable Care Act subsidy.
But there’s one important exception: If you have covered or made significant progress toward your deductible under COBRA and you have ongoing medical needs, you may want to keep COBRA. Otherwise, if you expect to have medical expenses and you switch to a new plan, you may need to start your deductible again at zero.
Also, if your income is relatively high, and you don’t expect to qualify for much of a health insurance premium subsidy under the Affordable Care Act, and if you don’t have any major pre-existing conditions that you expect will require ongoing care, you should consider Option 3: Health Sharing.
Health Insurance Option #3: Explore the Health Sharing Alternative
You aren’t limited to traditional, off-the-shelf health insurance plans after a layoff or job loss.
Depending on your circumstances, you may be better off dropping health insurance altogether and joining a health sharing plan.
Health sharing, also known as medical cost sharing, is a non-insurance alternative to traditional health insurance that has gained popularity in recent years.
This approach involves individuals coming together to share healthcare costs, guided by shared values and principles.
What is Health Sharing?
In a health sharing plan, members pool their financial resources to cover each other’s medical expenses.
These plans are typically organized by religious or ethical organizations, and they operate based on a set of common beliefs and values.
Members contribute a monthly share amount, which is then used to pay for the medical bills of fellow members who have eligible expenses.
Health Sharing Advantages
- Cost Savings. Health sharing typically saves hundreds of dollars per month for a family compared to the unsubsidized cost of a traditional health insurance policy. The difference can easily amount to thousands of dollars per year for a family that doesn’t qualify for an Affordable Care Act policy.
- Freedom of Choice. Health sharing plans offer flexibility when it comes to choosing your healthcare providers. Unlike some traditional insurance plans that have restricted networks, health sharing plans often allow you to see the doctors and specialists you prefer.
- Shared Values Many health sharing plans are organized around shared values, such as faith-based principles. This can be appealing to individuals who want their healthcare contributions to align with their beliefs and values.
Health Sharing Disadvantages
Not Suitable for All Health Needs. Health sharing may not cover all medical expenses, and there may be waiting periods before expenses for treating pre-existing conditions are shareable for new members.
This can be a drawback for individuals with specific healthcare requirements.
Also, health sharing plans typically offer less robust benefits when it comes to mental health and prescription drugs compared to most traditional health insurance policies.
If you or a member of your household has significant pre-existing conditions, or if you take high-cost prescription drugs, you may be better off selecting a traditional health insurance plan, even though it may have higher monthly charges.
Every individual and family is different, and there are no one-size-fits-all solutions.
That’s why it’s a good idea to schedule a free consultation with an expert Personal Benefits Manager before making any final enrollment decision.
Health Insurance Option 4: Enroll in your Spouse’s Workplace Plan
If your spouse is covered under a workplace health insurance plan, and his or her employer extends that plan to families, you may be able to join that plan.
You may have to wait until that plan’s open enrollment to join. And you will have to start over with deductibles.
Not every employer extends benefits to family members. Check with your spouse’s employer for specific details on their plan’s costs, open enrollment periods, and eligibility.
Health Insurance Option 5: Purchase a Short-Term, Limited Duration Health Plan
While not available in every state, these plans can be a viable option if you just need a plan during unemployment to tide you over until you are again employed and can enroll in a workplace plan, or until Open Enrollment comes around and you can join a more permanent plan.
They may not offer full benefits if you have pre-existing conditions. And unlike with Marketplace plans, which must take all comers during Open Enrollment, you could potentially get turned down based on your medical history.
Click here to learn more about short-term health insurance plans.
For a free comprehensive analysis and quote for a short-term health insurance policy, click here.
Health Insurance Option 6: Enroll in Medicaid or Medicare
This option depends entirely on your eligibility.
Medicaid is the federally-funded, state-run program for the poor and indigent. You can enroll in Medicaid if you have little in the way of assets and your income is very low.
As for Medicare, most people can enroll if they are age 65 or older. You can also enroll at an earlier age if you have certain medical conditions, such as amyotrophic lateral sclerosis (Lou Gehrig’s disease), blindness, or end-stage renal failure.
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Lost Your Job? Here’s What to Do
Navigating the complex landscape of post-job loss health insurance is a critical decision.
COBRA offers convenience, but typically comes at an unaffordable cost.
Affordable Care Act (Obamacare) coverage provides alternatives, though without COBRA’s subsidies. Acting swiftly within the 60-day Special Enrollment Period is vital to avoid gaps in coverage.
At this stage, the best thing to do is to make an appointment for a free consultation with a Personal Benefits Manager with HSA for America.
These experienced professionals are highly trained and unlike captive agents and most health insurance agents, they can speak to you about all your health insurance options, including health sharing and short-term health insurance.
Make that appointment now, while you’re still within your 60-day special enrollment period windows. This preserves your health insurance options.
Meanwhile, take this online quiz, which is designed to help you narrow down your health insurance options and zero in on the best strategy for your individual circumstances.
And check out our For Further Reading links below!
For Further Reading: Up Your HSA Game with Three Wealth Maximizing Strategies | How to Find the Best Doctors | How to Get Out of the Health Insurance Scam | Understanding COBRA Insurance: Is It Right for You? | Health Insurance After Divorce
