Health Insurance for the Unemployed

Jenifer Dorsey
March 26th, 2020 March 26th, 2020 |
Read time: 8 minutes
young adults waiting for a job interview

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Find out if you qualify for temporary coverage for emergencies and hospitalization – Don’t go uninsured between major medical plans.

Budgeting may be a concern when you’re in between jobs, and it may be tempting to go without health insurance to save some money. But when you’re uninsured, you also may be more vulnerable to medical debt as accidents and illnesses are rarely predictable and won’t necessarily wait until you have employer-sponsored benefits again.

In fact, a recent study found that “66.5% of all bankruptcies were tied to medical issues, either because of the high costs of medical care or lost income from time off work.”[1]

Having some form of 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 or pay a tax penalty even though the federal tax penalty for going without coverage has been eliminated.[2]

In this post, we’ll explore health coverage options when you need health insurance between jobs, including:

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COBRA Continuation

First, let’s talk about the Consolidated Omnibus Reconciliation Act, which is commonly called COBRA. COBRA allows employees and their dependents to retain their job-based health insurance benefits for a limited time following certain qualifying life events that impact their coverage eligibility.

For instance, as an individual employee, qualifying events include losing coverage due to:[3]

  • Being terminated from your job due to any reason other than gross misconduct
  • Reducing the hours of your employment

Additional qualifying events may apply for spouses and dependent children of covered employees.

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: As far as health insurance between jobs is concerned, an individual electing COBRA is responsible for their entire monthly premium, including the portion previously covered by their employer, plus a 2% administrative fee.[6] 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 2019 Kaiser Employer Health Benefits Survey, the full annual cost of employer-sponsored health insurance for an individual averaged $7,188 in 2019.[7] The survey reported $20,576 as the average, full annual cost of employer-sponsored health insurance for a family in 2019.[8]

Based on these amounts and the 2% administrative fee, the average monthly COBRA payment would be $610.98 for an individual and $1,748,95 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.[9] 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.[10]

What you need to know: Regardless of COBRA’s price, one advantage 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 healthcare needs.

3 Non-COBRA Options

While COBRA can help you retain your job-based group major medical insurance, that insurance could cost you more due to the absence of an employer contribution and the additional 2% administrative costs.[11]

As mentioned above, even with the added cost, there are reasons you may elect COBRA continuation coverage such as wanting to maintain the exact same health insurance benefits and access to the providers with whom you’ve already established care.

However, if you do decide to waive COBRA continuation coverage, you may have alternative health insurance options. Although less expensive, some of these alternatives provide more limited benefits when compared to COBRA continuation coverage.[12]

1. Major Medical Insurance (ACA-Qualifying Coverage)

ACA plans are qualifying major medical policies sold through, and on and off state-based exchanges.

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 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—read more about the ACA metal levels. 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? No. Major medical plans are only available during open and special enrollment periods.

Under certain circumstances, such as losing your job-based health insurance, you become qualified for a special enrollment period—a period of time during which you can purchase major medical insurance outside of the annual open enrollment period.

Otherwise, you must purchase individual major medical insurance during the annual open enrollment period, which typically takes place from November to December.

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.

Cost considerations: If you buy major medical insurance from 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.

Unemployment compensation does count 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.[13]

Learn more about ACA tax credits and subsidies.

Do You Qualify for an Affordable Care Act Subsidy?

Use the ACA Subsidy Calculator to find out if you can get financial help if you enroll in ACA-qualifying major medical insurance. Learn more about subsidies.

How to apply: You can purchase major medical insurance from or your state’s state-based health insurance exchange as well as away from the Exchange, directly from a health insurance producer or health insurance company.

What you need to know: Major medical insurance is considered minimum essential coverage that fulfills the individual mandate. It is 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.

In addition to individual major medical insurance, you may have access to your spouse’s job-based health insurance; your spouse will need to check with their employer to verify.

2. Medicaid

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

Medicaid eligibility varies by state, but some states have expanded their program to include single adults who earn up to 138 percent of the federal poverty level. As of July 2018, a total of 34 states, including the District of Columbia, had expanded their Medicaid programs under the Affordable Care Act.[14]

In states that did not expand Medicaid, other eligibility criteria apply—visit 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 or a state-based health insurance exchange. Visit 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).

3. Short Term Health Insurance

Short term health insurance is not ACA compliant and doesn’t cover essential health benefits. However, if you need temporary health insurance between jobs (and you need it quickly), then short term health insurance can provide benefits for as few as 30 days and as soon as the day after you qualify.

During a period of unemployment, short term health insurance provides a range of benefits that help pay for unexpected medical expenses related to emergency room visits, hospitalization, surgery and more. Some plans even include limited coverage for certain pre-existing conditions or a few preventive services.

Available year-round? Yes.

Policy length: As few as 30 days and up to 364 days depending on your state.

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, along with not covering pre-existing conditions, and including annual maximum benefits caps, are what sometimes makes short term health insurance premiums lower than unsubsidized major medical insurance or COBRA.[15]

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.

How to apply: 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.

You can also call 888-855-6837 to speak with a health insurance agent.

What you need to know: Short term health insurance is not ACA compliant. As mentioned above, that means it is not required to include the 10 essential health benefits or the full scope of no-cost preventive services required by the ACA. And you can be denied coverage based on your health history.

Compare short term medical cost and coverage by requesting a quote – it just takes a minute.

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Summary + Next Steps

You have a range of options for health insurance between jobs but it’s important to start the decision process soon after you become unemployed.

Common options include:

There isn’t one coverage solution that’s perfect for everyone who is unemployed; it’s important to consider your budget and healthcare needs when making a decision. If you’d like help, call 888-855-6837 to speak with a health insurance agent today to review your options.

Need Health Insurance?

Shop + Compare in 3 Easy Steps

  • Find Available Products
  • Quote + Compare Plans
  • Apply Online if You Qualify
Originally Published On September 6th, 2018
Independence American Insurance Company and/or Madison National Life Insurance Company, Inc. may underwrite the products referenced on this website. Legal Disclaimers.