Healthcare in the United States can be expensive. If you’re temporarily between jobs, obtaining insurance coverage until you secure another job with benefits can help reduce what you pay out of pocket for medical expenses, and in some states, you’re required to have qualifying coverage to avoid paying a tax penalty.
Options for health insurance when you’re unemployed may include:
- COBRA continuation of health coverage
- Affordable Care Act (ACA)-qualifying individual coverage
- Non-ACA-qualifying short-term health insurance
- $0 premium COBRA coverage available Apr. 1 – Sep. 30, 2021
- $0 premium individual ACA Silver plans available Jul. – Dec. 31, 2021
- Enhanced ACA premium tax credits for qualifying low-income earners through Dec. 31, 2022
The remainder of this post discusses the four options in more detail, including costs, policy duration, and availability.
Find Products Available for Me
Want ACA, Supplemental, or Short Term Insurance?
Find Products Available for Me
COBRA Continuation Insurance
First, let’s talk about the Consolidated Omnibus Reconciliation Act, commonly called COBRA.
COBRA allows employees and their dependents to retain their job-based health insurance benefits and provider networks for a limited time following certain qualifying life events that impact their coverage eligibility. This can be especially beneficial for those in the midst of treatment for a health condition or injury.
As an individual employee, qualifying events include losing coverage due to:
- Being terminated from your job due to any reason other than gross misconduct
- Reduction in the hours of your employment
Additional qualifying events may apply for spouses and dependent children of covered employees.
Cost considerations: An individual electing COBRA is responsible for their entire monthly premium, including the portion previously covered by their employer, plus a 2% administrative fee. In turn, you will keep the health insurance you had through your employer and continue to have access to the same benefits and provider networks; the only change is what you pay for this coverage.
According to the 2020 Kaiser Employer Health Benefits Survey, the full annual cost of employer-sponsored health insurance for an individual averaged $7,470 in 2020. The survey reported $21,342 as the average, full annual cost of employer-sponsored health insurance for a family in 2020.
Based on these amounts and the 2% administrative fee, the average monthly COBRA payment would be $634.95 for an individual and $1,814.07 for a family.
April 1 through September 30, 2021, Only: Due to a provision of the 2021 American Rescue Plan Act, available COBRA subsidies fully subsidize the cost of the premium to the employer via Medicare tax credits. That means that there is no premium cost to the enrollee for that period of time.
Available year-round? You may elect COBRA coverage within 60 days of your qualifying event.
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.
Apply for COBRA: 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, depending on the nature of your qualifying event, you or your employer must notify your group health plan.
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.
You have an election period of at least 60 days, which begins on the later of the date you are provided with the election notice or the date you would lose coverage.
ACA-Qualifying Individual Major Medical Insurance
ACA plans qualify as minimum essential coverage major medical policies sold through HealthCare.gov and on and off state-based exchanges. Policies are guaranteed issue, which means you will qualify for coverage regardless of your health history and cannot be charged more based on current or past health conditions.
Individual major medical insurance plans that qualify as minimum essential coverage will most closely resemble employer-sponsored benefits. As such, they are often a good option for those who have pre-existing medical conditions and/or health conditions that require continuous care.
There are four coverage tiers available categorized by cost-sharing percentages and commonly referred to as “metal levels,” bronze, silver, gold, and platinum. Read more about the ACA metal levels. As required by law, individual major medical insurance plans include certain preventive services as well as the essential health benefits.
Cost considerations: If you buy major medical insurance from HealthCare.gov or a state-based health insurance exchange and meet certain income criteria, you may qualify for a subsidy. Advance 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. Learn more about ACA tax credits and subsidies.
- Through Dec. 31, 2022: The 2021 COVID Relief Bill increases premium tax credits for lower-income earners – including subsidies that could result in $0 premium plans for those at or below 150% of the federal poverty level (FPL) – and removes the subsidy eligibility cap for households above 400% FPL.
- Jul. – Dec. 31, 2021: The COVID Relief Bill also temporarily extends $0 premium Silver ACA plans to those that collected unemployment benefits in 2021. Learn more about how the 2021 COVID Relief Bill could impact you.
Because of these recently expanded and increased subsidies, it’s a good idea to validate if you qualify for premium savings now.
Available year-round? No. Major medical plans are only available during the annual open enrollment and special enrollment periods.
- Feb. 15 – Jul. 15, 2021: The Biden Administration extended a federal COVID-19 Special Enrollment Period for HealthCare.gov. Anyone who wishes to enroll in an ACA plan or switch plans may do so during this enrollment period. That includes individuals who didn’t previously receive job-based health coverage but qualify for an ACA plan.
- Outside of the COVID-19 Special Enrollment Period, individuals may qualify for a special enrollment period due to a qualifying life event, such as losing their job-based coverage.
Policy length: Plans are good for the current year, and they may be renewed for the next year during open enrollment if they are not discontinued.
Tax implications: Unemployment compensation counts as income when applying for an ACA plan, so you’ll need to estimate and report any expected unemployment compensation when applying for coverage through the Marketplace.
Apply for an ACA Plan: You can purchase major medical insurance from HealthCare.gov, your state-based health insurance exchange as well as away from the exchanges, directly from a health insurance producer or health insurance company.
Validate your subsidy eligibility and compare ACA plans.
Medicaid is considered ACA-qualifying minimum essential coverage. In every state, you could qualify for Medicaid based on income, household size, disability status, family status, and other factors.
However, if you live in a state that expanded Medicaid as part of the ACA, you could qualify for a premium tax credit based on income alone at 138% FPL. If you live in a state that has not expanded Medicaid (a “non-Medicaid expansion state”), then the income level to qualify is set at 100% FPL and you must meet other eligibility requirements as well.
Find out if your state has expanded Medicaid or use HealthCare.gov’s Income Levels + Savings tool to quickly find out if you could qualify for Medicaid based on income using the current year FPL income limits, state, and household size.
Cost considerations: Medicaid provides low-cost or no-cost healthcare coverage, depending on your household income and your state’s program criteria.
Available year-round? Yes—there is no designated open enrollment period for Medicaid.
Policy length: Medicaid coverage is based on month-to-month eligibility.
Apply for Medicaid: Your Medicaid eligibility is determined during the ACA qualification process. Start at HealthCare.gov to see if you could be eligible for Medicaid.
Short-Term Health Insurance
Short-term health insurance is not ACA compliant and doesn’t cover the essential health benefits. However, if you need temporary health insurance while between jobs (and you need it quickly), then short-term medical can provide benefits for as few as 30 days and as soon as the day after you qualify and make your first premium payment.
Short-term health insurance includes benefits that help pay for unexpected medical expenses related to emergency room visits, hospitalization, surgery, and more. Learn more about short-term health insurance.
Cost considerations: Unlike major medical insurance, short-term health insurance is not required to include the essential health benefits or the full scope of no-cost preventive services required by the ACA.
These limitations, annual maximum benefits caps, and not covering pre-existing conditions can cause short-term health insurance premiums to be lower than unsubsidized major medical insurance or COBRA.
The kinds of things that factor into your short-term medical premium amount are your age, location, number of people on the policy, health history, and the benefits level you select. To review short-term health premiums and plan designs, get a short-term medical quote.
Available year-round? These plans are not subject to the ACA open enrollment period and are available year-round in most of the states where they’re sold. However, some states don’t allow the sale of short-term health plans or place limitations on their availability and durations. Learn more about short-term health plan availability by state.
Policy length: As few as 30 days and up to 364 days depending on your state.
Apply for a short-term health plan: You can easily apply for short-term health insurance online. Coverage may begin as early as the next day if you qualify. To determine eligibility, you must answer a few health-related questions.
Compare short-term health plans and enroll if you qualify.
Summary + Next Steps
There are typically a range of options available for health insurance if you’re between jobs but it’s important to start the decision process soon after you become unemployed.
Depending on your circumstances, common options include:
- ACA-qualifying individual health insurance
- Short-term health insurance
Remember, the American Rescue Plan Act and HealthCare.gov COVID-19 Special Enrollment Period going through August 15, 2021 have improved affordability and access to ACA plans for millions of people.
Even if you’re outside of the typical eligibility window to qualify for individual special enrollment, you can still get ACA coverage during the COVID-19 Special Enrollment Period.
Find out if you qualify for ACA subsidies and compare plans.
For assistance reviewing your options or applying for short-term health or an ACA plan, call 888-855-6837 to speak with a health insurance agent.
Need Health Insurance?
Shop + Compare in 3 Easy Steps
- Find Available Products
- Quote + Compare Plans
- Apply Online if You Qualify