If you're like many Americans, your employer provides you with your health insurance coverage. The 2019 Kaiser Family Foundation Employer Health Benefits Survey found that about 153 million Americans were relying on employer-sponsored health insurance.
But what happens if you lose your job? What options do you have for health insurance if your coverage came from your employer?
Losing your health insurance because you've lost your job is scary. Fortunately, you do have options for coverage. Some are long-term solutions while others are temporary measures on which you can rely until you find a new job and another employer-provided policy.
And, unfortunately, most of your options will be costly.
The challenge of finding new health insurance might become more common across the country thanks to the COVID-19 pandemic. Deb Gordon, a former health insurance chief marketing officer based in Cambridge, Massachusetts, and author of The Health Care Consumer's Manifesto: How to Get the Most for Your Money, said that a growing number of people might have to search out new options as the country's unemployment rate rises because of the pandemic.
“There are already tens of millions of people without insurance in this country. The pandemic just exacerbates the problem and shines a bright light on it,” Gordon said.
What are your options if you do lose your job and your employer’s health insurance? Here’s a look at some choices you do have.
The most common safety net for people who lose their employer's health insurance is COBRA.
COBRA insurance – which came about thanks to the Consolidated Omnibus Reconciliation Act -- lets you keep your employer-based health insurance even if you lost your job. The problem? Paying for COBRA coverage is expensive. And you can only keep this insurance for a limited time.
On the good side, when you pay for COBRA coverage, you'll receive the same health insurance you relied on from your employer.
If you lose your job for reasons other than gross misconduct, you, your spouse and your dependent children are eligible for COBRA health insurance for 18 months. This form of insurance is meant as a temporary solution, a bridge to keep you covered until you find a new job and a new employer-provided health insurance plan.
Even if you could keep COBRA for longer than 18 months, you might not want to. This insurance is expensive. That’s because you are responsible for paying 100 percent of the monthly cost of the insurance that your employer formerly provided. You'll also be responsible for an administrative fee, which can run as high as 2 percent.
How much might you pay for COBRA? The Kaiser Family Foundation in its 2019 survey found that the annual premiums for employer-sponsored family health coverage hit $20,576. That's a lot of money for you to cover if your employer is no longer footing most of the bill.
“People generally aren’t aware of how much their employers pay to provide health insurance,” Gordon said. “Then they are confronted with the cost of COBRA and it can be a shock.”
Your state or federal health insurance marketplace
Created as part of the Affordable Care Act, your state or federal health insurance marketplace can provide relief, too. These marketplaces -- which you can find at HealthCare.gov -- offer individual and family health coverage, providing plans frequently known as Obamacare. This insurance is designed for people who don't have access to health insurance through a job or other avenue.
There are open enrollment periods for state and federal health insurance marketplaces. But even if you've missed this period, you can still sign up for coverage through the marketplaces if you've lost coverage because of a job loss. Losing your job is known as a "qualifying event," and gives you the chance to shop for an individual health insurance policy.
Finding the right health insurance on the marketplaces will take time and research. You'll need to make sure that you can afford the monthly premium and that you get enough coverage to make the cost of your new plan worth it.
You can shop for private health insurance
You don’t have to limit your search for new insurance to plans listed at HealthCare.gov. Consumers can choose from private health insurance plans, too.
Be aware, though, that these plans aren't required to cover 100 percent of your preventative care costs. ACA plans are required to do this. But on the plus side, private health insurance policies often offer more flexibility to their members.
Shelley Grandidge, an insurance broker and owner of Southwest Health Options in Glendale, Arizona, said that people have fewer choices when searching for insurance at HealthCare.gov. Those hunting for private health insurance, though, can find a plan that gives them more options when choosing physicians and other healthcare professionals.
This doesn't mean, though, that private health insurance is the right choice for everyone. Those needing more preventative care, for instance, would be better off choosing an Affordable Care Act plan.
"I tell people, if you are having a baby, an ACA plan is better for you. They pay for all your preventative care," Grandidge said. "If you are someone who has mental health issues and needs a fair amount of treatment, the ACA is the place for you. If you're not comfortable paying $30, $40 or $100 for preventative care visits, private health insurance might not be right for you."
But if you want more flexibility and a wider choice of health insurance plans? Private health insurance might work. Grandidge said that as of early July consumers searching for an ACA plan in Arizona's Maricopa County could only choose from five HMOs. Those searching for private health insurance in the same area have more options, she said.
How much you'll pay for private health insurance will vary. Grandidge said that a client 62 or older in reasonably good health can find private health insurance costing from $364 to $575 a month. Another of Grandidge’s clients, a 29-year-old woman, qualified for a plan for $265 a month, while a father in his late 50s qualified for a plan for $595 a month.
“Private health insurance is not bound to the same requirements that Affordable Care Act plans are,” Grandidge said. “It’s a mixed blessing. They can be less expensive and more flexible. But on the flip side, it doesn’t have to cover all of your preventative care at 100 percent.”
The Medicaid program can be another option for those who have lost their jobs. Many states expanded their Medicaid programs under the Affordable Care Act. In those states, you can qualify for health insurance through Medicaid at either no cost or for a very low fee.
As of the writing of this story -- July of 2020 -- 38 states have expanded their Medicaid programs to cover all residents below certain income levels. You can see if you qualify for Medicaid health insurance based on your income here.
Even if you don't qualify for Medicaid based on income, you should still apply. You might qualify for your individual state's Medicaid program depending on if you have children, are pregnant or have a disability. You can apply for Medicaid at any time of the year, either through the Health Insurance Marketplace or through your own state's Medicaid agency. To do this, log onto this page offered by HealthCare.gov.
Catastrophic health insurance
You can also purchase a Catastrophic health insurance plan from HealthCare.gov. But beware: These plans could cost you a significant amount of money while not covering as much as other, more expensive plans.
A Catastrophic plan is designed to cover the worst illnesses or injuries. But before these plans cover most services, you'll have to shell out thousands of dollars to cover their deductibles. In 2020, you'll have to pay a deductible of $8,150 before your Catastrophic plan begins to cover your medical costs. Once you do pay that deductible, your plan will pay for all covered services without any copayment or coinsurance.
On the positive side, the monthly premiums are usually low with these plans, and they will cover three visits to your primary care doctor even before you've met your deductible.
Because these plans are so expensive, they're designed for younger people in relatively good health who are less likely to need more intense medical care. To qualify for a Catastrophic plan, you must be under 30 or have a hardship or affordability exemption.
Healthcare sharing ministry
You might also consider signing up for a healthcare sharing ministry. But be warned that these aren’t health insurance, and such programs aren't right for everyone.
Healthcare sharing ministries are faith-based nonprofits that pool the money of their members. They then use that money to help cover the medial expenses of these members.
On the positive side, these ministries are usually less costly than private health insurance or an ACA insurance plan. That might make them an attractive option to some people who have lost their employer-provided health insurance.
But these plans do come with limits. Healthcare sharing ministries typically limit the amount of coverage they'll provide, with most capping how much coverage you can receive per month, per year and per lifetime. The Commonwealth Fund in a 2018 issue brief pointed to one sharing ministry with plans that limit members to $1 million in coverage during their lifetimes and a maximum of $50,000 for every calendar year.
You might also have to promise to follow certain biblical or religious values to join one of these ministries. If you suffer from drug addiction or alcoholism, then, you might not be able to turn to one of these ministries for financial coverage. Healthcare sharing ministries can also turn people away if they have pre-existing conditions.
Christopher Jin, president of Unite Health Share Ministries -- better known as UHSM -- said that while health share programs aren't for everyone, they are an alternative for some, especially if these consumers have lost their employer-provided health insurance and are already a member of a faith-based community. He said that members of his healthcare sharing ministry can save up to 40 percent on their medical costs versus what they’d pay for traditional insurance.
"Member-to-member sharing health care is not for everyone, but those of faith who qualify can get quality healthcare while saving considerably on health care costs," Jin said.
Go the self-pay route
And if you can’t qualify for any other insurance option after losing your job? You might have to self-pay for medical care as you need it. This isn’t ideal, but you might be able to negotiate lower costs for medical care from your doctors. You might also be able to hunt down free or low-cost care from clinics and charitable organizations.
Gordon recommends that you not panic even if you lose your employer-provided health insurance.
“The key is to act like an empowered healthcare consumer,” Gordon said. “Think like a negotiator. Everything is negotiable. Ask what the price is going to be before you get treated. Ask what the bill will be for you. Ask until you get an answer. And if it’s a number you can’t afford? Say you can’t afford it and ask if there’s a way to make it cost less.”