If you lose your health insurance, there are a few options for quickly getting coverage again depending on your situation. Your options for preventing gaps in health insurance coverage include COBRA, ACA Marketplace plans, government programs such as Medicare or Medicaid, and short-term and medical indemnity plans.
We live in an uncertain economy, and most people will change jobs several times throughout their working careers. But in the U.S., private health insurance has traditionally been tied to employment. This means that if you’re out of work for any period of time you might lose access to health care.
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Why Is Health Insurance Linked to Employment?
Elizabeth Mitchell, president and CEO of Purchaser Business Group on Health, a nonprofit coalition of employers based in Oakland, California, says the reason why health insurance in the U.S. is largely tied to employment began developing in the mid-20th century.
“During World War II, employers couldn’t raise wages to attract workers, so they started offering health benefits instead.” Because employees didn’t have to pay taxes on those benefits and employers could deduct the costs from their own tax burden, that made this approach very popular and it rapidly became the norm.
“For better or worse, that workaround still shapes our system today,” Mitchell explains.
While this arrangement allowed millions of people to get coverage when it was first enacted and over the decades since, it has created a system that ties health care to a traditional job situation. And in the 21st century, the job force has shifted significantly. Even for workers who still work for a company that offers conventional health insurance benefits, if you lose your job or become too ill to work, your health insurance could be at risk.
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What Might Cause You to Lose Health Insurance?
Health insurance provides important financial protection and is linked to improved well-being, so losing access to coverage can be a big deal, says Whitney Stidom, vice president of sales enablement with eHealth Inc., a health insurance broker and online resource provider headquartered in Austin.
But there are several reasons why you might lose health insurance, including:
— Job loss. If you’re laid off from your job, your company goes out of business, you’re fired or your hours are cut to below the threshold to qualify for your employer’s benefit system, you’ll lose your health care coverage.
— Aging out of parent’s plan. The Affordable Care Act, a sweeping health care reform law that went into effect in 2010, mandates that health care plans must allow children to stay on their parents’ plan until they reach age 26. Most plans terminate the child’s coverage the month they turn 26.
— Change in marital status. Getting divorced can lead to a loss of health insurance coverage if you were covered under your spouse’s plan.
— Moving. Some insurance policies have a limited region in which they work, and moving outside of the policy area could lead to loss of coverage.
— Insurer cancelled policy. Your insurance company can cancel your policy, and if that happens, you’ll lose coverage. You may be offered another plan to replace it, but the alternative may offer significantly different coverage or be more expensive.
— Changing jobs. If you’re on an employer-sponsored health care plan and change jobs to another employer, you’ll lose coverage from the first employer. Some companies require workers to work for a set time period, 30 or 60 days, for example, before they become eligible to enroll in the company plan at the new company. The ACA sets the maximum waiting period at 90 days.
— Eligibility status change. Some insurance policies, particularly those offered by Medicaid, require beneficiaries to meet certain eligibility requirements, so if your financial picture changes and you’re suddenly making more money than allowed for that program, your policy will be cancelled.
— Premium cost changes. If your premium increases to an unaffordable level and you’re no longer able to pay for it, you’ll lose that coverage. Nonpayment of any type of insurance premium results in termination of the policy.
— Fraud. If you’re caught engaging in insurance plan fraud — such as submitting reimbursement requests for doctor’s visits that never happened, for example — you may be kicked out of the plan.
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What to Do if You Lose Coverage
While losing health insurance coverage can be scary, the good news is you have some options to choose from in finding replacement coverage, including:
— COBRA
— ACA Marketplace plans
— Government programs, such as Medicare or Medicaid
— Short-term and medical indemnity plans
COBRA
If you’ve had a qualifying life event, which includes things like losing your job or aging out of your parent’s plan, you’ll likely be offered COBRA coverage to bridge the gap until you get a new job or source insurance elsewhere.
“COBRA is a federal law allowing people to temporarily extend their employer-based health coverage at their own cost for up to 18 months. In most cases, the former employer no longer contributes to monthly premiums, so COBRA can be expensive, but it allows people to retain coverage that is familiar to them,” Stidom says.
COBRA is designed to cover workers and their families, including anyone who was covered through the employer-based plan while the worker was employed there, she adds.
Generally, you’ll have up to 60 days after the qualifying event to enroll in COBRA. COBRA can be a good option if you’re in active treatment for a condition or need to keep your specific doctors without an immediate interruption. You’ll also keep your current progress toward your deductible if you enroll in COBRA, which may be beneficial for some individuals.
However, Mitchell encourages you to do a little research and compare the cost of COBRA with ACA Marketplace options before you make a decision to enroll in COBRA, as you may be able to find a more affordable option that offers largely the same benefits on the Marketplace.
ACA Marketplace
The passage of the ACA created a marketplace for individuals to purchase a private health insurance policy outside the confines of a traditional employer-offered plan. The Marketplace is an online platform where you can shop, compare and enroll in private health insurance plans.
Anyone who needs health insurance can sign up for an ACA plan during the annual nationwide open enrollment period, which runs from November 1 through January 15. Losing employer-based health insurance also opens a special 60-day eligibility window during which you can sign up for an ACA plan.
“During this 60-day window, qualified people can enroll in an ACA individual or family plan and apply for government subsidies to help them cover the cost of monthly premiums,” Stidom explains.
You don’t necessarily need to have previously had employer-sponsored health care to get health insurance through the ACA Marketplace; anyone ages 18 and older can purchase an ACA individual or family plan. You may also be eligible for government subsidies to help you cover the cost of monthly premiums. However, the current subsidies are set to expire at the end of 2025, which could make ACA plans unaffordable for many Americans.
In all cases, it’s wise to shop around for the best deal for your individual situation, Mitchell says.
Government insurance programs
Lower-income individuals and families may qualify for coverage under Medicaid or CHIP, the State Children’s Health Insurance Program. These joint federal-state programs provide free or low-cost, comprehensive health insurance coverage for low-income Americans.
Medicaid covers people of all ages, but have strict income requirements to quality. CHIP is designed specifically for uninsured kids whose families earn too much for Medicaid but who can’t afford private insurance.
Both programs are administered at the state level but receive federal funding. You’ll have to check with your state’s Medicaid or CHIP agency about specific eligibility requirements and to apply.
Short-term and medical indemnity plans
If you cannot afford anything else and are willing to forgo comprehensive coverage, there are two other options to consider: short-term and medical indemnity plans.
Short-term plans are exactly what they sound like. They are limited policies that provide temporary medical coverage to bridge gaps between major health plans. They can be ideal for people who are between jobs, those who need coverage during the waiting period at a new job and those who missed their 60-day enrollment period.
These plans tend to have lower premiums than major medical plans, and they usually offer flexibility to see the doctor you want. But there are specific limitations to consider before signing up, Stidom explains.
“While short-term health plans can provide some financial protection in case of a medical issue, it is important to understand the limitations of these options, including a lack of coverage for essential benefits, such as preventive services, mental health care and preexisting conditions.”
On the other hand, hospital indemnity plans pay enrollees a fixed amount after certain urgent medical visits, such as a hospital visit, and these can help cover out-of-pocket medical expenses and offer some financial protections in lieu of comprehensive insurance.
“But like short-term plans, hospital indemnity plans typically do not cover preexisting conditions and may include per-incident, yearly and lifetime benefit limits and waiting periods,” Stidom says.
In short, if you’re considering either of these types of plans, be careful to read the fine print and understand what you’re purchasing before you sign up.
Timelines and Enrollment Windows
The first step after you learn you’ll be losing your health insurance is to confirm exactly when your current coverage ends. From there you have a limited time, usually a 60-day special enrollment period, during which you can shop around and sign up for a new insurance policy via one of the options above.
Choosing Your Coverage Path
When deciding whether to opt for COBRA or an ACA plan, you should consider several features and how they usually compare to one another.
COBRA vs. Marketplace
| Feature | COBRA | ACA Marketplace |
| Premiums | You’ll pay 100% of the premium plus a 2% admin fee to keep the employer-sponsored coverage you had | Potential costs savings via subsidies and tax credits |
| Other costs | You keep your existing coverage and deductible progress | Your deducible will reset when you enroll in the new plan |
| Network | You can see the same doctor you had under your employer-sponsored plan | Broad choice of plans with varying networks |
| Benefits | Your benefits will be the same as what you had under your employer-sponsored plan | Broad choice of plans with wide variations in benefit options |
| Duration | Limited to 18 months after the loss of your employer-sponsored plan | ACA plans typically renew annually like employer-sponsored plans do |
| Subsidies | Not offered | May significantly reduce out-of-pocket costs |
| Best candidates | If you need seamless continuity of your current health care plan after a job loss or reduction in hours and you can afford the premium, COBRA is a great option. | If you can’t afford to shoulder 100% of the premium of your employer-sponsored plan and have some wiggle room in terms of benefits and network, you may do better with a less-expensive ACA Marketplace option. |
Because your progress toward your deductible continues when you enroll in a COBRA plan, it may be a good idea to stick with that option instead of selecting an ACA Marketplace plan, especially if you’re receiving a long-term treatment, such as dialysis or chemotherapy. That’s because you’ll be able to continue that treatment without interruption by enrolling in COBRA.
Resources for Understanding Your Health Insurance Options
“Navigating the system after losing health insurance can feel overwhelming, but you have options,” Mitchell says. And there are some places you can turn for help as you assess your options. For example, “your state may have navigators or special supports who can help you at no cost,” Mitchell says.
Places to turn for more information include:
— Healthcare.gov, the online home of the ACA Marketplace
— Your employer’s human resources department to help you understand your COBRA options
— Medicaid.gov
— State-specific programs, such as your state’s Medicaid or CHIP agency and state health connector marketplaces
Losing health care coverage can be scary, but acting quickly means you can line up the coverage you, your kids and any other dependent family members need to ensure seamless coverage of health care needs.
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What Do I Do If I Lose My Health Insurance? originally appeared on usnews.com
