Health Insurance for Unemployed Americans: All Your Options

by Nick Versaw Updated December 2nd, 2021

Health insurance for unemployed: patient showing his empty wallet

Losing a job is one of the most disappointing things that can happen in life. Not only do you lose your ability to pay your bills, but you also lose access to previous employment benefits such as health insurance. 

If you don’t have a reliable source of income, what should you do to make sure you’re still covered for your health care needs? Thankfully, there are plenty of alternatives for health insurance for unemployed people. Let’s explore your options so you can get through unemployment while still having your health needs met.

What is a Health Insurance Plan?

Health insurance is a form of insurance coverage that pays for all your medical expenses in the form of prescription drugs, hospitalization, office visit fees, surgical treatment, and so on.  

It helps to learn all you can about health insurance before you commit to a plan, especially if you’re buying it on your own. While it’s no longer required for all Americans to be insured, some states will charge a penalty if you’re uninsured, so check your state laws to see if that applies.

According to the federal government, here are 10 essential benefits that a typical insurance plan includes:

  • Ambulatory patient services (health care outside of a hospital, like in a physician’s or specialist’s office)
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

These 10 items are required to be covered on any plan purchased through the government’s Health Insurance Marketplace, which we’ll cover later.

Best Health Insurance Plans for Unemployed People

Smiling elderly couple

If you’re temporarily out of work, don’t sweat it. You have a couple of options for a health insurance plan during unemployment. They include:

  • Medicaid
  • Marketplace health insurance
  • Consolidated Omnibus Budget Reconciliation Act (COBRA)
  • Short-term health insurance
  • Parent’s or spouse’s health insurance plan

Here’s a rundown of each of these unemployment health insurance options.

Medicaid

Medicaid is a public health program sponsored by the federal and state governments that provides free or inexpensive health coverage to low-income individuals, among other groups.

Medicaid helps cover medical fees such as out-of-pocket costs, deductibles, copayments, and so on. State Medicaid programs are required to cover services like doctor visits, medications, inpatient and outpatient care, preventative services like vaccines, and mental health services.

Medicaid eligibility and benefits really vary from state to state, but it mostly focuses on your current household income and not your individual income. Your eligibility is mostly based on your income level and your household size. 

How low should your income be to qualify? This will depend on the government’s current federal poverty level (FPL) and your state’s guidelines. The FPL is the income amount that the government uses as a reference to determine if you qualify for unemployment benefits like Medicaid. For example, in 2021 the FPL was $12,880 in income for individuals and $26,500 for a family of four. 

How to get it: See if you qualify by going through the government website and applying via the Marketplace or your state’s Medicaid website. There is no open enrollment period — you can apply anytime.

Marketplace Health Insurance

The Marketplace is a spot for you to buy an individual health insurance plan, regardless of your employment status. 

The Affordable Care Act (ACA) offers unemployed and uninsured people a chance to apply for a health plan during a special enrollment period. 

This period lasts 60 days after losing your health insurance coverage from your employer. This is really helpful, especially if you lost your job and your dependents rely on you for health coverage. 

When you register for Marketplace coverage, you can discover your eligibility for savings on your tax credits or premiums.

How to get it: Visit the unemployment guide on healthcare.gov and follow the steps to apply.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA coverage gives you the opportunity to prolong your employment coverage even after you cut ties with your employer.

COBRA ensures that all employers allow their ex-employees to keep paying to maintain their health care coverage at least 18 months after leaving their job. If you qualify, this period can be extended to 36 months.

So, is COBRA an option for you? Private-sector companies with 20 or more employees as well as local and state government jobs likely offer COBRA coverage. 

Jobs with the federal government, a church, or some religious organizations don’t offer COBRA, unfortunately (but they might have something similar).

States can sometimes have exceptions for companies with fewer than 20 employees, and they can also have a similar program under a different name.

There is a catch: COBRA coverage will likely require you to pay your full premium — typically including the portion your former employer may have covered. A 2% administration fee is also allowed to be tacked on as a COBRA premium. This can mean you’re paying a lot more than before. You and your beneficiaries (family members that are covered on your plan) can all be covered if you enroll.

Many people choose COBRA coverage as a holdover until they’re enrolled in a Marketplace plan or Medicaid, so don’t be afraid to go for this option and others simultaneously.

How to get it: If your former health insurance qualifies for COBRA, your health plan documents will have information in them. There are varying rules around who has to talk to who at the time you’re leaving the job. In general, ask your employer ASAP and read up on COBRA FAQs for more information.

Short-Term Health Insurance

This affordable health insurance covers you for extended periods that lasts approximately 30 to 90 days. 

You can register for this low-cost plan if you have lapses in coverage or health emergencies. 

For instance, let’s say that you left your job and it might take a few months before you start a new one. This plan will cover you for that brief period that you’re out of work. 

One of the downsides of this type of health insurance is that it has limited coverage for services and treatments. It doesn’t cover pre-existing conditions such as mental illness, pregnancy care, or a disease.

During your unemployment period, here are a few companies that offer short-term health insurance:

  • UnitedHealthcare: UnitedHealthcare has an excellent reputation and a massive provider network — you’ll have access to 1.4 million doctors and 6,500 health care facilities and hospitals. You can choose to pay for either 30-92 days of care or even per-injury/illness for a lower cost.
  • Sidecar Health: Sidecar is fairly new in the world of private health insurance. Despite its newbie status, this company can save unemployed people up to 40% on medical costs. Sidecar offers four main plans: Premium, Standard, Budget, and Custom. They offer a $0 deductible, although you can choose to pay for one to lower the premium. Since you can sign up and cancel at any time, this is a smart short-term option.
  • Kaiser Permanente: When you encounter financial hardships throughout your unemployment, Kaiser has a wide range of policies at different price points. This insurance company also offers you the option of opening a Health Savings Account where you can make tax-free contributions to use for certain health care expenses. Kaiser is an HMO company that offers insurance services to corporate, family, individual, and group accounts through their long-term and short-term packages. 

How to get it: Explore short-term health insurance online and find a plan that fits your health needs.

Parents’ or Spouse’s Health Insurance Plan

If you’re not on the same plan as your spouse or parent, you’re missing out on one of the most effective health insurance plans. 

If you’re married and unemployed and your spouse has a reliable insurance plan via their employer, you can easily be included in their policy. 

Alternatively, if you’re 26 years old or younger, you’re eligible to be added to your parents’ health plan.

How to get it: It’s likely that your job loss counts as a qualifying life event, which means your spouse or parent can add you to their plan outside of the annual open enrollment period. This typically has to happen within 30 days of losing your coverage. 

If it happens to be open enrollment time, simply have your parent or spouse add you as a beneficiary when they sign up for coverage. No qualifying event needed. Easy!

Stay Covered Even in Unemployment

Health insurance for unemployed: an adult and a child's hands holding a red heart

If you’re considering signing up for any of the options mentioned in this article, take time to learn all there is to know about it first. If you haven’t already, weigh your unemployment insurance options and find the one that works best for you. If you’re not sure of what to go for, reach out to a licensed health insurance professional to help you decide which plan best suits your unemployment needs. 

Are you wondering how much a certain procedure might cost you if you’ve recently lost your job and don’t currently have insurance? You can use this tool to compare prices from all the providers in your area so you can budget for upcoming procedures you absolutely need while you’re unemployed.

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