The coronavirus pandemic sweeping the globe has shuttered many industries, paralyzing parts of the economy and leaving workers unemployed or furloughed from their jobs. As of this writing, more than 33 million people had filed for unemployment benefits. Worldwide, a staggering 4 out of 5 workers have been affected by COVID-19.
In the wake of millions of layoffs, many workers are losing their employee benefits like health insurance coverage. The thought of spending money on something when your income has ceased can be seemingly impossible. But there are ways to get health insurance coverage without completely breaking the bank.
First, you need to determine if your health insurance benefits are being suspended or if your employer is going to give you options.
Furloughed employees might be able to keep their health insurance if their employer is willing to continue benefits. If you are furloughed you might still have to pay for your health insurance premium which is normally withdrawn automatically from your paycheck. No paycheck means the employer will need you to send them a check for your portion of coverage each month you are furloughed. Some employers might allow their employees to wait and make contributions after they are earning income again. It’s important to assess your financial situation and communicate with your employer as much as you can.
If you have lost your job, benefits typically end the moment you become unemployed or at the end of the month. In addition to unemployment, you are eligible for COBRA (officially known as the Consolidated Omnibus Budget Reconciliation Act of 1985) which allows you to keep your current health insurance plan. In essence, you take over the payments of your health plan and pay a 2% administrative fee. Most employers share the cost of an employee’s health insurance, so this is the most expensive option available if you have to pay 102% of the health insurance monthly premium. However, there are other options that can provide more economical options.
Temporary Health Insurance
Temporary health insurance, also known as short-term medical insurance, is exactly as advertised. These health plans are not meant to be long-term, permanent insurance, but health coverage for the “right now” when you are unemployed or just uninsured. They fill the coverage gap while you explore more permanent solutions or wait for a job to come back. Short-term health insurance can be purchased for as little as 30 days or up to 364-days. In some states, individuals can re-apply for plans for up to three years. This makes them extremely flexible for hourly workers or the self-employed who exist based on the ebb and flow of the economy.
As a health insurance alternative, short-term health plans have a similar structure to major medical or employer group plans. There is a deductible you have to meet before the insurance company is responsible for paying any part of a medical bill. Once you hit the deductible amount, you are then responsible for a percentage of your medical bills. This is called coinsurance. You “co” pay with your insurance company who picks up the majority of the bill. Short-term health plans can offer doctor office visit copays, and if that is important to you, compare plans that offer that feature. Some short-term medical plans also provide prescription drug benefits or at the very minimum, a discount drug card.
What makes short-term medical insurance so economical?
Temporary health insurance is budget-friendly because it is not required to cover the same 10 essential benefits that are mandated on permanent insurance through the Affordable Care Act (ACA). ACA plans, also known as Obamacare, are required to cover things like maternity and mental health services – conditions that are not “short-term.” This helps keep costs lower. Temporary health plans also do not accept many pre-existing conditions, so if you have an underlying health concern these plans are not a good option for you.
Affordable Care Act Plans
If you have been laid off from your job, you qualify for a special open enrollment period allowing you to enroll in an ACA health plan outside of the yearly Nov. 1-Dec. 15 enrollment window. You have 60-days to enroll from the time of your unemployment. ACA plans can be found at healthcare.gov or state-based exchanges like Covered California, Maryland Health Connection or MNsure in Minnesota.
The main feature of an ACA plan is a tax subsidy that you might qualify for based on your income during the year. Estimating your income for the year could be tricky right now, but you can make the best guess if you believe you would qualify for a subsidy. However, be careful and conservative. If you state your income incorrectly and make more in 2020 than reported to the government, you will be penalized and required to return some if not all of the subsidy money.
What Income to Report When Applying for ACA Subsidy
- All household member’s income (not just you).
- Unemployment compensation.
- All income earned up until unemployment.
- All extra income including but not limited to interest income, dividend income, capital gains, any cash support or alimony.
- Outside income like rental income or car ride-sharing income.
- Any withdrawals from IRA’s or 401(k)’s.
You can immediately determine eligibility based on income using healthcare.gov’s income tracker.
If your income is low and you anticipate being out of work for an extended period of time, you may qualify for Medicaid. Based on your Modified Adjusted Gross Income, Medicaid considers taxable income and tax filing relationships to determine financial eligibility in most cases. You must also meet certain non-financial eligibility criteria. Medicaid beneficiaries generally must be residents of the state in which they are receiving Medicaid. They must be citizens of the United States or certain qualified non-citizens, such as lawful permanent residents. In addition, some eligibility groups are limited by age, or by pregnancy or parenting status. Due to Medicaid expansion, some states have expanded their programs to cover all people below certain income levels. If you think you might qualify, it could be worth checking into the program. If you can’t get Medicaid, there are still additional health insurance options.
Spouse or Parent’s Health Plan
If your spouse receives health insurance through their employer or if you are under age 26 and a parent has employer health coverage, you could be added to their plan for a lower rate than buying health insurance on your own. Ask them to check with their human resources department to see what is available to you and what cost estimates might look like.
Limited Benefit Medical Insurance
Limited medical insurance, also known as fixed indemnity insurance or fixed dollar, zero deductible plans, provides an alternative to traditional health insurance by lowering out-of-pocket expenses. There are typically no insurance deductibles or coinsurance limits to meet. Instead, the plans have specific cash payments for both sickness and accidental injuries regardless of other coverages. No specialist referrals are required and benefits do not vary in- or out-of-network providers. Here’s an example of how they work.
Jim is a chef and owns a small downtown cafe. Since he is self-employed and has to purchase his own health insurance, he has a limited medical insurance plan to help reduce the blow of any sudden medical expenses he wasn’t expecting. It’s more affordable than an ACA plan and Jim feels confident that he won’t get sick and need hospitalization.
One morning, Jim slices his finger pretty badly. He’s cut himself before and can tell this is the worst cut he’s ever had. So Jim wraps his finger up and heads to an in-network Urgent Care. Sure enough, he needs stitches. He knows he will have to pay for some of the visit but the overall cost for going to Urgent Care with his fixed indemnity plan will be less than if he was uninsured.
When Jim gets the final bill, the Urgent Care visit is $125. After being re-priced by his insurance company, the visit cost is reduced to $100. Jim’s limited insurance benefit plan pays $100 for Urgent Care visits twice a year, so his insurance pays for Urgent Care at 100%. Jim still has to pay for the stitches (also at a reduced rate), but the office visit is covered. If he had no insurance he would have had to pay full retail for the entire visit versus getting reduced pricing and a portion of the visit covered.
While limited benefit health insurance does not cover all medical expenses, it does provide insureds reduced rate pricing and a set dollar amount for common medical expenses like doctor visits and hospital stays.
First and foremost, faith-based “health plans,” also known as Christian sharing ministries, are not health insurance. Instead of paying a monthly insurance premium to an insurance company, members of faith-based plans send a monthly amount to a general “pool” managed by the sharing ministry. Then, when a member has a medical bill, the invoice is sent to the sharing ministry. The organization determines if it’s a qualifying expense and sends payment to the member to pay their medical provider.
There are some restrictions. Not all pre-existing conditions are covered. Or there could be a waiting period for treating a pre-existing condition. There is also a dollar amount you have to pay out-of-pocket first, similar to an insurance deductible. Members must also adhere to the standards of the Christian ministry like not drinking or agreeing to attend church on a regular basis. So while there are restrictions and limitations, the exclusions help keep the monthly cost down.
Health Insurance Alternatives
If you are unemployed or a furloughed worker as a result of an economic downturn, you have options. Research your options and consider your health as well. COBRA might make the most sense if you are close to your deductible and anticipate additional medical expenses this year. Or maybe you qualify for an ACA plan subsidy and can get major medical coverage for less than $100 a month. If you are confident that you’ll have a job again soon, short-term health insurance can be an affordable option to hold you over during your coverage gap. It’s all in what is best for you and your health.