How to get health insurance if you’re unemployed or changing jobs

People often worry about what will happen to their health insurance when they change jobs.

Maybe you’ve lost your job and you’re looking for health insurance while you search for your next opportunity. Or it could be that you have a new job, but your employer doesn’t start health insurance immediately, which means you’ll be uninsured for a while.

What do you do about insurance after a job loss? 

You have multiple options depending on where you live, your income and your situation. That’s due in part to the Affordable Care Act, also called Obamacare.

How do you get health insurance between jobs?

The first thing to find out is when your previous employer is stopping your coverage. It may:

• End your coverage immediately.
• Wait until the end of the month.
• Cover you for months, especially if you were laid off.

You can begin to plan what to do next once you know when your previous employer is going to stop coverage.

If you’re starting a new job, find out from the new employer when that coverage begins. You may find that you’ll only be without insurance for days or a few weeks. In that case, you may decide to go without health insurance temporarily or get a short-term health plan. 

How to keep health insurance when switching jobs?

One of the biggest concerns people have when they switch jobs is whether they can keep their health insurance. But you have two options if you want to continue your health insurance plan.

Buy health insurance through the Health Insurance Marketplace: If you quit your job or get fired, you can purchase health insurance through a government marketplace or exchange, which lets people look for and sign up for health insurance. Losing job-based coverage, getting laid off or quitting your job makes you eligible to buy insurance during what’s considered a special enrollment period.

Sign up for COBRA insurance: One way to keep your health insurance coverage when switching jobs is through COBRA, which allows former employees and their dependents to continue using an employer’s group health insurance coverage after leaving the company. COBRA provides a continuation of coverage for up to 18 months, but it requires that you pay the full cost yourself. 

COBRA continuation allows you to keep your current health insurance and see the same doctors. You get 60 days to decide if you want to choose COBRA and 45 days after that to pay the first month’s premium. However, this law only applies to companies or organizations with 20 or more employees. 

What are your health insurance options when you’re between jobs?

There are multiple avenues for most people looking for health insurance between jobs:

1. Get covered under your spouse’s health plan
2. COBRA
3. Individual insurance/ACA exchanges
4. Short-term health plans
5. Medicaid

If you’re 65 or older, you’re also eligible for medicare.

Let’s review each unemployment health insurance option, as well as the pros and cons.

Option #1: Go on your spouse’s health plan

Getting added to a spouse’s plan is usually the easiest option if it’s available.

Typically, you can’t switch insurance unless it’s during the open enrollment period. The open enrollment period is when you’re able to make changes to your health insurance benefits. That includes adding a spouse to a health plan.

However, life events like losing your job, having a child and getting married qualify for a special enrollment period. During that special enrollment period, you and your spouse can change or add insurance.

If you decide to go on your spouse’s plan, your spouse needs to speak to his or her employer about health insurance options, sign up for a policy and add you to the plan. Getting added to a plan may raise premiums significantly — especially if your spouse goes from single coverage to family coverage. 

Pro: You get to stay in a group plan, which is usually less expensive than going with individual insurance or COBRA.

Con: Your spouse may pay much higher health insurance premiums. 

Option #2: COBRA

For many years, COBRA was one of the only viable options for Americans who lost their jobs and look for gap health insurance before they can get more affordable health insurance coverage. 

The Consolidated Omnibus Budget Reconciliation Act of 1996 (COBRA) created a way for people to buy coverage under their job-based group health plan. Employers with at least 20 employees must provide this option for people who lose their job.

The benefit of COBRA health insurance is that you get to keep the same insurance plan for 18 months. The drawback is it’s quite expensive. Kaiser Family Foundation estimates that the average annual family premiums for an employer-sponsored health insurance plan cost more than $22,000 in 2020. Employers pick up a majority of those costs. 

However, with a COBRA plan, you have to pay for all of those costs plus an administrative fee of up to 2%.

You get 60 days to decide whether to continue your former employer’s coverage via COBRA insurance.

Pro: You get to keep your group health coverage temporarily.

Con: It costs much more than your previous employer-based health insurance coverage.

Option #3: Individual insurance and ACA exchanges

Individual health insurance was once only affordable to people who were young and in perfect health. Before the ACA, health insurers based individual health insurance premiums on your health status and pre-existing conditions. That led to sky-high premiums for people who weren’t in excellent health. An insurer could even deny health insurance coverage because of a pre-existing condition.

The ACA changed that. Now, health insurers must accept you regardless of your health status and you won’t have to pay exorbitantly higher premiums if you’re not in perfect health.

You can get an individual plan, also called nongroup insurance, either as part of the ACA exchanges or off the exchanges directly from the health insurer.

The ACA divides plans by metal level. The level depends on premiums, out-of-pocket costs, how much cost the insurer will cover and how much the member will pay:

• Bronze: Health plan pays 60% on average for health care services. You pay 40%.
• Silver: Health plan pays 70% on average. You pay 30%.
• Gold: Health plan pays 80% on average. You pay 20%.
• Platinum: Health plan pays 90% on average. You pay 10%.

This means you pay lower premiums but more out-of-pocket costs if you choose a Bronze or Silver plan compared to the others. On the other hand, Platinum and Gold have the highest premiums but the lowest out-of-pocket costs.

ACA plan premiums are usually higher than employer-based health plans. Many members in ACA plans may not notice premium increases, though. The ACA provides subsidies and tax credits with ACA plans to offset high premiums. California has even more generous assistance. When shopping for an ACA plan, the health insurance marketplace website will estimate subsidies based on your income.

Pro: Plans offer ACA protections, including the 10 essential health benefits, such as outpatient, maternity and prescription drugs.

Con: These plans can be more expensive than employer-sponsored health plans.

Option #4: Short-term health plans

Short-term health plans are a low-cost way to help bridge the gap between jobs for most Americans.

“Short-term medical is a type of health insurance that lasts for a specified term. Most states allow short-term medical plan terms from 30 days up to 364 days,” says John Bartleson, owner of Englewood, Colorado-headquartered Health Benefits Connect. “These plans are great for people who are in-between jobs, students and self-employed or contract employees.”

Short-term benefits are limited, though. The plans have hefty out-of-pocket costs. Americans can have a short-term plan for a year and request to extend it twice. So, these short-term plans can last up to three years.

However, some states don’t allow short-term plans and others limit them to only three or six months.

These plans are exempt from ACA rules. That means short-term plans don’t have to provide the 10 essential health benefits. Most short-term plans don’t cover maternity, prescription drugs and mental health services. You would have to pay for all of those services yourself. 

These plans can serve as a stop-gap when you’re in between jobs, but they can be expensive if you need health care services.

Pro: Low premiums.

Con: High out-of-pocket costs, limited coverage and some states forbid short-term plans.

Option #5: Medicaid

Depending on your income and where you live, you might be eligible for Medicaid. Medicaid covers low-income Americans.

Thirty-eight states expanded Medicaid, which is the primary reason millions of previously uninsured people now have health insurance since the ACA. Those states’ Medicaid programs cover people whose salary is up to 138% of the federal poverty limit. That’s about $35,000 for a family of four.

You can apply for coverage through your state’s Medicaid site.

Pro: Low-cost option with consumer protections and low out-of-pocket costs.

Con: You have to meet income requirements and you may have trouble finding a doctor who takes Medicaid.

How does health insurance work when switching jobs?

You might have to wait for a certain amount of time before you qualify for health insurance at a new job. But you still need health insurance during that time.

Most individuals choose to keep their former employer’s health insurance through COBRA continuation coverage. However,  job switchers will have to pay the premiums on their own after leaving a company. But if you don’t want to sign up for COBRA, you can buy insurance from a HealthCare.gov health exchange without waiting for the annual open enrollment period.

You can also purchase short-term or temporary health insurance plans from any private insurance provider. 

Lapse in health insurance between jobs

A health insurance lapse between jobs is a period when an individual is without health insurance coverage. This can happen for various reasons, such as losing a job or stepping down from a position that offers health benefits. While it may seem like a minor issue, a health insurance lapse can have serious consequences. Without health insurance, individuals are responsible for paying all of their medical costs out-of-pocket.

Individuals who experience a lapse in health insurance coverage should take steps to secure new coverage as soon as possible to avoid any gaps. There are a number of options available for individuals who need to obtain health insurance coverage, including private health insurance plans, government-sponsored health insurance programs and short-term health insurance plans.

Temporary health insurance between jobs

Many people find themselves without health insurance at some point in their lives. If you’re between jobs, you may be wondering if there is such a thing as temporary or short-term health insurance to tide you over until you’re back on your feet.

Some health insurance companies offer short-term health insurance plans that can last anywhere from one month to 12 months. 

These plans typically have lower monthly premiums than traditional health insurance plans, but they also come with some restrictions. 

For example, most short-term health insurance plans don’t cover preventive care or pre-existing conditions. However, if you’re healthy and just need coverage for a few months, a short-term health insurance plan may be a good option.

You can also consider COBRA continuation coverage, which may be an option if you’re leaving a job where you had health insurance. COBRA continuation coverage allows you to continue your existing health insurance for up to 18 months, but it can be expensive. Another option is to look into state-sponsored health insurance programs like Medicaid. These programs provide health insurance to low-income individuals and families.

Options if you need health insurance but have no income

If you currently have no earnings and want to get health insurance, you have choices, but they may be limited.

“The best option for people with no income would be Medicaid. Each state has its own Medicaid program and, although it’s not always called Medicaid, each Medicaid program is designed to provide medical insurance to low-income individuals and families,” explains Bartleson. He says the easiest way to find your state’s Medicaid program and apply is to search online.

If you have children or minor dependents and meet the requirements, you can enroll them in your state’s Children’s Health Insurance Program (CHIP), says Brian Martucci, the Minneapolis-based finance editor for Money Crashers.

“As with Medicaid, CHIP income eligibility varies by state, but the limits can be more generous than for Medicaid,” Martucci adds.

Best health insurance for the unemployed

COBRA can be a worthy option for the recently unemployed, but those plans are expensive.

Gamil Kharfan, CEO of Miami-based Claro Insurance, says the recently enacted American Rescue Plan now enables unemployed Americans to become eligible for a subsidized ACA health plan.

“Today, if you are unemployed and are receiving an unemployment subsidy, you can enroll in a subsidized health plan if you had an income equivalent to 133% of the federal poverty level. This basically means a zero-premium plan for you and your family,” says Kharfan.

However, Jacquelynn Neat, president/founder of Indigo Care Partners, Inc., in Overland Park, Kansas, says you may have trouble affording health insurance if you don’t have income. 

“That’s why the individual plans available on Healthcare.gov are an excellent option, and you may qualify for a subsidy depending on your estimated annual income. Plus, your dependent children may even qualify for free premiums,” Neat says. 

Best overall health insurance

Unlike other types of insurance, such as car and home insurance, your health insurance company options are limited by your employer and where you live. 

Here are the five top-rated health insurance companies for 2021 in Insure’s Best Health Insurance Companies : 

• Kaiser Permanente: Kaiser Permanente tops the list of the best health insurance companies in 2022. Kaiser is a large healthcare provider that offers individual/family plans, Medicare, Medicaid and group health insurance. It has high scores from organizations such as the National Association of Insurance Commissioners (NAIC) and the National Committee for Quality Assurance (NCQA), which, respectfully, rate insurers for keeping complaints down and customer care up. And it is the only company on Insure.com’s  list with a perfect 5.0 from J.D. Power, which measures customer satisfaction. 

• Humana: Humana is a large healthcare company. It has a 7% market share and offers Medicare, dental, vision, and group plans. Humana is ranked second on Insure.com’s list, thanks to its high ranking from J.D. Power.

• Blue Cross Blue Shield of Michigan:  The insurer offers different types of plans, such as individual and family plans, dental and vision insurance, Medicare, Medicaid, employer-provided plans and specialty benefits. BCBS MI received high scores from NCQA and NAIC.

• Health Care Service Corp:  Health Care Service is a large company that provides health insurance in five states. It has more than 325,000 physicians and nearly 9,250 facilities. The company offers dental, employer plans, family health insurance, individual health insurance, Medicare and Medicaid coverage. It has received high ratings from J.D. Power and NAIC.
• Highmark: The insurance company provides individual and family plans, children’s health insurance as well as Medicare. It has the high scores from  NAIC and NCQA.

Best short-term coverage

Looking for short-term medical coverage while you’re in between jobs? 

Here are three companies that may fit the bill: 

• Pivot Health: This company helps insure more than 72,400 members monthly, providing coverage choices sold directly on its website and through partnering insurance brokers. A division of HealthCare.com, Pivot Health is rated “Excellent” by its customers, per Trustpilot reviews. Pick deductibles between $1,000 and $10,000, pay a max out-of-pocket cost between $3,000 and $10,000 and count on a max annual limit between $100,000 to $1 million. Coinsurance on all plans is 20% to 30%, which means the member picks up that percentage of health care service costs. 
• Everest: Everest provides short-term health plans underwritten by Everest Reinsurance. It earns a B+ rating from the Better Business Bureau. This company offers deductible options ($1,000, $2,500, $5,000, $7,500 or $10,000), co-pay options ($30, $40 or $50), co-insurance options (50/50, 70/30, 80/20 or 100/0), coverage period maximum ($250,000, $750,000, $1,000,000, or $1,500,000) and length of coverage options.
• UnitedHealthcare. The nation’s largest health insurance company offers short-term health plans underwritten by Golden Rule Insurance Company. Its plans cover 100% of medical costs after a deductible is met ($2,500, $5,000, $7,500, $10,000 or $12,500; 0% coinsurance) or choose options with 20%, 30%, 40%, or 50% coinsurance until you hit the yearly maximums. Max benefits span from $1 million to $2 million (exclusions apply).

Best health insurance for families

If you don’t qualify for Medicaid, the ACA marketplace provides subsidized family health insurance plans.

“Because Medicaid income eligibility limits are higher for larger families, you may qualify for coverage — even if you are earning some income during your period of unemployment,” Martucci says.

Note that what’s best for you and your family depends on what you want from a health care plan. That’s why it’s smart to shop around carefully and compare insurers and plan offerings.

Here were the top health insurers for multiple categories in our Best Health Insurance Companies: 

• Best health insurance company for claims: Blue Shield of California
• Best health insurance company for price and customer service: Kaiser Permanente
• Best health insurance company for policy coverage and billing and payment processing: Florida Blue
• Best health insurance company for policy offerings: FloridaBlue

Best health insurance with dental coverage

ACA health care plans are required to cover 10 essential health benefits for adults. Unfortunately, dental coverage is not one of these benefits. Consequently, many health plans — even those not offered on Healthcare.gov — don’t include dental.

“However, some ACA plans include dental coverage under the same plan premium,” Kharfan continues.

Additionally, there are separate standalone dental insurance policies available on the ACA marketplace. In the Chicago area, for instance, qualified applicants can apply for dental plans offered by:

• Humana Dental
• DentaQuest
• DentaTrust
• Guardian
• Delta Dental
• BlueCare Dental
• BESTOne Dental
• Dentegra Dental

Be aware that there are two categories of ACA marketplace dental plans: High and low. 

• High coverage plans have higher premiums but lower copayments and deductibles; hence, you’ll pay more every month but less when you use dental services. 
• Low coverage plans have lower premiums but higher copayments and deductibles; as a result, you’ll pay less every month but more when you use dental services.

Good news if you have kids: Dental coverage is considered an essential benefit for children and, therefore, must be available within health care plans that cover them.

“There are also supplemental plans you can buy in addition to your health policy to cover dental and many other services like vision, accident or hospitalization,” says Kharfan.

Best catastrophic coverage

There is another health insurance option if you meet the eligibility criteria. It’s called catastrophic coverage. 

Bartleson says catastrophic health insurance is defined as a high-deductible health plan for consumers who are 30 years old or less. However, you may still qualify for a catastrophic coverage plan if you demonstrate a hardship exemption, such as homelessness, eviction, domestic violence, death of a family member, natural disaster or bankruptcy.

“Catastrophic coverage plans have high deductibles, and typically most medical services are subject to meeting the deductible,” adds Bartleson. “Even though medical services like doctor visits and prescriptions would cost more than with a traditional copay type plan, there is a significantly lower cost for monthly premiums. The lower monthly premiums may offset the increased service costs, especially if the individual does not need frequent doctor’s visits or prescription drugs.”

Popular catastrophic coverage insurers include:

• Aetna
• Cigna
• Kaiser Permanente

How to shop around when you don’t have health insurance

If you’re out of work and need a health insurance plan, make sure to explore all of your options. You can start with our What’s the Best Health Insurance Option for You?

If you’re shopping for a health insurance provider, you can also use Insure.com’s list of the Best Health Insurance Companies to compare and find one that best suits your needs. You can additionally use the Health Insurance Advisor tool to identify what type of health insurance coverage you need.

Here are some steps to take:

• Explore your spouse’s employer’s health insurance options.
• Read through your former employer’s COBRA information and see whether that plan would make sense for your situation.
• Go to your state’s ACA marketplace, enter your information and see how much those plans would cost you.
• See if there are individual health insurance plans not part of the ACA exchanges that might work better for you.
• Check into a short-term plan if that interests you.
• Figure out if you’re eligible for Medicaid in your state.

Taking these steps will help put you on the path to getting a health insurance plan that works for you, whether an Obamacare plan or not. Being between jobs can be stressful. However, finding a health plan that bridges your insurance gap until a new employer covers you will relieve some of your stress while you’re out of work.

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