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A Quick Guide to Health Insurance for the Unemployed

A Quick Guide to Health Insurance for the Unemployed

Posted May 25, 2016 by Jenifer Dorsey

Being unemployed can be stressful for a number of reasons. Oftentimes, money is tight and financially strapped individuals and families may be tempted to go without health insurance when they are in between jobs with employer-sponsored benefits.

However, no matter how healthy you are, a single accident or unexpected illness can bring about medical bills anytime. Having some form of insurance coverage until you secure another job with benefits can help reduce what you pay out of pocket for healthcare. Unemployed individuals have several temporary and long term health insurance insurance options. Four common solutions include:

Short term health insurance

Individual major medical insurance (i.e., Obamacare plans)


COBRA continuation coverage

Additionally, many supplemental insurance products can be combined with these plans and help you save on out-of-pocket healthcare expenses while you are between jobs and after you land your next position.

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Short term health insurance

Unemployed individuals in relatively good health who anticipate needing only a few months of health insurance coverage may consider short term coverage. Short term health plans provide temporary benefits to help pay for a range of unexpected medical expenses—some plans even offer a few preventive care benefits.

Available year-round? Yes.

Policy length: As few as 30 days—as many as 364, depending on your state of residence.

Cost considerations: Due to their limited nature, short term plans tend to have lower premium than Obamacare premiums and COBRA continuation coverage rates. You can often choose from a range of plan deductibles. Click here to get a quote.

How to apply: Individuals and families looking for a safety net in the event of a catastrophic illness or injury can quickly and easily apply for temporary health insurance online. Approval comes within minutes, and coverage may begin as early as the next day. To determine eligibility, applicants answer a small number of health-related questions; those with serious health conditions are unlikely to qualify.

You can also work with a health insurance producer.  Call the number at the top of your screen to speak with one of our certified advisors will answer your questions and help you find the right coverage for your situation.

What you need to know: Temporary health insurance plans are not ACA compliant. You can be denied coverage based on your health history, and having a short term plan does not fulfill the individual shared responsibility provision. Under the Affordable Care Act, most Americans are required to have health insurance that meets its definition of minimum essential coverage. Those who go without minimum essential coverage for more than a single three-month period and do not qualify for an exemption may face a tax penalty known as the shared responsibility payment



Obamacare plans

Under certain circumstances, losing job-based (i.e., employer-sponsored) health insurance is a qualifying life event that makes you eligible for a special enrollment period. A special enrollment period allows individuals and families to purchase ACA-compliant health insurance outside of the typical open-enrollment period.

Individual major medical insurance plans that qualify as minimum essential coverage will closely resemble employer-sponsored benefits. As such, they are often a good option for those who need long-term health insurance coverage or have pre-existing medical conditions and/or health conditions that require continuous care.

Consumers may choose from four coverage tiers that are categorized by cost-sharing percentages—click here to read more about the Obamacare metal plans. As required by law, individual major medical insurance plans include certain preventive services at no additional cost and medical services in 10 categories of essential health benefits.

Available year-round? Obamacare plans are only available during open and special enrollment periods.

Policy length: Plans are good for the current year and may be renewed for the next year during open enrollment.

Cost considerations: If you buy your major medical plan from a state-based or federally facilitated health insurance exchange and meet certain income criteria, you may qualify for an Obamacare subsidy. Advanced premium tax credits can lower what you pay for coverage each month, and cost-sharing reductions lower what you pay out of pocket for healthcare.

You can also work with a local agent or health producer to find a subsidy-eligible Obamacare plan. These individuals can assist you with determining your subsidy eligibility based on your current situation. Call the number at the top of your screen to speak with a certified advisor who can help you through the process.

How to apply: You can purchase Obamacare plans from your state’s state-based or federally facilitated exchange as well as in the private marketplace from a health insurance producer or health insurance company. Call the number at the top of your screen to speak with a certified advisor who can assist you in exploring local coverage options and estimating your subsidy.

What you need to know: Obamacare plans are considered minimum essential coverage that fulfills the individual shared responsibility provision. They are guaranteed issue, which means you will qualify for coverage regardless of your health history and cannot be charged more based on your health history. Premium rates are based on five factors: age, location, family size, plan category and tobacco use.




Medicaid is a state-federal program that extends healthcare coverage program to adults and children who qualify based on income and other circumstantial criteria.

As of March 2016, a total of 32 states, including the District of Columbia, had expanded their Medicaid programs under the Affordable Care Act.[1] Medicaid expansion extends program eligibility to adults under age 65 who earn up to 138 percent of the federal poverty level.[2] In states that did not expand Medicaid, other eligibility criteria apply—visit Medicaid.gov for state-related specifics.

Available year-round? Yes—there is no designated open enrollment period for Medicaid.

Policy length: Medicaid coverage is based on month-to-month eligibility.

Cost considerations: Medicaid provides low-cost or no-cost healthcare coverage, depending on your household income and your state’s program criteria.

How to apply: You may be able to apply for Medicaid through a state-based or federally facilitated exchange. Visit Medicaid.gov for enrollment details in your state.

What you need to know: Medicaid is considered minimum essential coverage that fulfills the ACA’s individual shared responsibility provision (i.e. individual mandate).


Under the Consolidated Omnibus Reconciliation Act, which is more commonly called COBRA, employees and their dependents can retain their job-based health insurance benefits for a limited time following certain qualifying life events that impact their coverage eligibility—for instance, being terminated from your job due to any reason other than gross misconduct or reduction in the hours of your employment.[3]

Available year-round? You may elect COBRA coverage within 60 days of your qualifying event.[4]

Policy length: Laid off workers eligible for COBRA continuation coverage are allowed by law to keep their group coverage for a limited time —18 to 36 months, depending on the circumstances.[5]

Cost considerations: COBRA can be one of the more expensive options since individuals become responsible for their entire monthly premium, including the portion previously covered by their employer, plus a 2 percent administrative fee.

According to the 2015 Kaiser/HRET Employer Benefits Survey, the full annual cost of employer-sponsored health insurance for an individual averaged $6,251 in 2015.[6] The survey reported $17,545 as the average, full annual cost of employer-sponsored health insurance for a family. Based on these amounts, the average monthly COBRA payment would be $531 for an individual and $1,491 for a family.

How to apply: Your group health plan must provide you with a Summary Plan Description that explains your COBRA rights within 90 days of becoming a plan participant. Once you have a qualifying event that makes you eligible for COBRA, you or your employer must notify your group health plan.

If the qualifying event is termination or reduced hours, your employer must notify the plan within 30 days of the event.[7] If the event is due to divorce, legal separation, or a child’s loss of dependent status under the plan, then you must notify the plan—procedures and timelines vary by plan and are detailed in your Summary Plan Description.[8]

Within 14 days of receiving notification of a qualifying life event, your plan must notify qualified beneficiaries (i.e., you and your dependents) of their rights to continuation coverage and how to make an election.[9]

What you need to know: Regardless of price, one of COBRA’s benefits is that it allows individuals and families to maintain comprehensive coverage with access to the same benefits and provider networks. This can be especially helpful to those who have ongoing medical needs.

Learn more about eligibility in the US Department of Labor’s “Frequently Asked Questions: COBRA Continuation Health Coverage,” or contact your employer's benefits adviser.



Supplemental products

You can buy additional benefits to help reduce your out-of-pocket healthcare costs. These supplemental plans include Telemedicine, which provides remote consultations with board-certified physicians to help reduce your office visit spending; medical gap insurance, which provides lump-sum cash benefits for covered accidents and critical illnesses that can be used toward your medical bills and household expenses; dental insurance, which can help you save on exams, cleanings and other dental work; and critical illness coverage, which provides lump-sum cash benefits upon diagnosis of a critical illness that can be used however you need.


Learn What Supplemental Plans Cost


Of course, no single health insurance solution is perfect for everyone. It is important to consider your budget and healthcare needs when making a decision. Consult health insurance producer before you buy. Call the number at the top of your screen to speak with a certified advisor who can answer your questions and help you assess your situation and explore your coverage options.





Originally posted Oct. 3, 2014. Last revised May 24, 2016.

Legal Disclaimers

[1] The Henry J. Kaiser Family foundation. “Status of State Action on the Medicaid Expansion Decision.” March 14, 2016. http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/

[2] HealthCare.com. “Medicaid Expansion & What It Means for You.” N.D. https://www.healthcare.gov/medicaid-chip/medicaid-expansion-and-you/

[3] United States Department of Labor. “FAQs about COBRA Continuation Health Coverage.” Accessed May 23, 2016. https://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html

[4] Ibid.

[5] Ibid.

[6] The Henry J. Kaiser Family Foundation. “Section One: Cost of Health Insurance.” 2015 Employer Health Benefits Survey. Sept. 22, 2015. http://kff.org/report-section/ehbs-2015-section-one-cost-of-health-insurance/

[7] Ibid.

[8] Ibid.

[9] Ibid.