The coronavirus pandemic has taken a significant toll on the U.S. economy. Widespread layoffs and furloughs have caused widespread unemployment, with more than 16 million unemployment claims being filed over a three-week period. Economic hardship will spread beyond the nearly 28 million Americans who were already uninsured. Many of the more than 150 million people who had health insurance through a job have now lost coverage.
“Under normal circumstances, if you end up staying in a hospital in a large metropolitan area like New York, charges could wind up being north of $30,000,” reports Sarah Michalczuk, Founder and CEO of predictaBill, a startup that helps people understand and select health insurance. “Without insurance, you would be responsible for negotiating that bill with the hospital yourself.”
This loss of health insurance comes right when the risk of needing medical care has risen because of the coronavirus. Ironically, having health insurance may be more critical now than ever.
Steps to Take After Losing Your Job
If you’ve lost your job or are worried you will, you may also be worrying about how to pay for coronavirus care and how to find health insurance when you are unemployed. Here are some of the steps you can take to navigate your options.
Step 1: Talk to Your Employer
If you get laid off, understand what your employer is offering on the way out, if anything. Find out how long your health insurance will be active and whether they’re offering any severance. They may not be able or willing to help offset your medical expenses, but it can’t hurt to ask if there is any way for them to extend your coverage. Some employers want to ease the pain of layoffs.
Step 2: Gather Documentation
Get documentation from your employer showing the effective date of termination. You may need this evidence to access certain types of insurance outside of open enrollment, such as subsidized coverage on the insurance marketplaces. Proof that you filed for unemployment could also serve as the evidence you need to apply for this form of coverage.
To qualify for subsidized coverage, you will also need to document your income. Tax filings reflecting past earnings may not show your go-forward situation, but you still may need them to get started.
Step 3: Think About Your Budget, Priorities and Risk Tolerance
Do you have health conditions or take medications that you know you’ll need to have covered? Are there specific doctors, hospitals or other health care providers you need to access? Will your budget allow you to pay for your own health insurance while you are unemployed, or will the new expense create a hardship?
The answers to these questions will help you prioritize your options. Virtually any health insurance will require you to make trade-offs between routine expenses and more variable out-of-pocket exposure, or between total expenses and the breadth of doctors and hospitals available. Assess your needs before you start, so you have an initial idea of which variables matter most to you.
Health Insurance Options After a Job Loss
With your priorities in mind, it’s time to explore your options.
The Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, gives you the right to buy your employer's coverage for as long as 18 months, and longer if you’re approaching Medicare eligibility after you leave your job.
The downside: You must be willing to pay for it. COBRA tends to be extremely expensive because the employer does not contribute anything. In 2019, the average cost of a family plan was more than $20,000 and more than $7,000 for an individual. Paying the full health insurance premium may be worth it if you have specific health needs or providers. Your employer plan may be more comprehensive than other options; maximum flexibility may be worth the price for you. If you’re generally healthy and don’t expect to need a lot of health care services, you may be willing to forego flexibility to save money.
Most companies with at least 20 employees are subject to COBRA rules, and they are required to notify you of this option. You have 60 days to decide whether or not to sign up, and coverage will be backdated to the date you lost your benefits.
Spouse or Partner Plan
If you have a spouse or partner with job-based insurance, you might be able to sign up for their plan. Though you can typically only join these plans during the company’s annual open enrollment period, losing your job may qualify you for an exception. Check the rules. Even if you didn’t join that plan before, it could be your best option if you get laid off.
Affordable Care Act Plans
On the federal government's health care site, Healthcare.gov, you can learn about the health insurance options created by the Affordable Care Act. If your state operates its own health insurance marketplace, you can find it through Healthcare.gov to avoid fraudulent sites.
Losing a job or your health benefits is considered a “qualifying event” that should let you enroll outside the standard open enrollment period. Because of the coronavirus, many states have opened up special enrollment periods so anyone without insurance can get coverage.
Depending on your specific situation, you might qualify for subsidies on the insurance marketplace. Lowering your health insurance costs when you’re unemployed can relieve some of the financial pressure you may face after a layoff.
On the marketplace, you can compare options from different health insurers with potentially different participating providers. You’ll also see different tiers of coverage (e.g., bronze, silver, gold or platinum), monthly premiums, deductibles, copayments, coinsurance and out-of-pocket maximums.
Look for a plan that covers the health care providers and facilities you care most about and specific prescriptions you may take. Think about your tolerance for covering a deductible if you need care versus paying more each month. Beware of plans that hit you both ways; there are sometimes available plans that do not offer great value.
Do the math with the variables until you find a plan that fits your budget and risk tolerance. Then, sign up as soon as possible to minimize your time without coverage; plans typically take effect the first day of the month following your enrollment.
In a narrow set of circumstances, such as if you’re under age 30, you may find available catastrophic plans. Proceed with caution. These plans do not tend to cover very much and are really only useful if you have a major medical issue. They can be better than nothing, but according to Michalczuk, the adage, “Buy cheap, buy twice,” may apply.
One way to get health insurance while unemployed is through Medicaid, the public health insurance program primarily designed for people below a certain income level. Under the Affordable Care Act, 37 states and the District of Columbia expanded Medicaid to cover more people. Eligibility depends on your income, family size, and other federal and state rules. Enrollment support may be available through hospitals, health centers and nonprofit agencies. Health care provider staff often know the intricacies of eligibility and can guide you through the process. If you’re not sure whether you’ll qualify, you may need to apply to find out.
Medicaid offers comprehensive benefits for no or low cost, so that it may be the most affordable option. In some areas, Medicaid offers more limited provider networks, which may not work for you. But to save money, it may be worth the trade-off, at least while you’re unemployed.
Don’t delay. Even if it takes time to determine your eligibility, coverage could be retroactively applied to the date you applied.
If you’re 65 or older and have had employer-sponsored insurance before a layoff, signing up for Medicare is a logical step. If you had signed up for the basic Medicare coverage when you turned 65 but used your employer insurance for things that Medicare doesn’t cover, this may be the time to revisit those choices. For example, Medicare Part D supplemental plans offer prescription drug coverage not included in basic Medicare. Most Medicare enrollees have a wide range of options through Medicare.gov, a robust marketplace and information hub. Enrollment counselors are also available to help you navigate these decisions.
What to Do If You Get Furloughed
If you get furloughed, some of these same options may apply. First, though, talk to your employer about what the furlough means for you. Generally, a furlough signifies the employer’s intention to rehire, but not the specifics of wages or health benefits.
Will they continue to pay for your health insurance during the furlough? If not, perhaps they would consider paying for part of the costs; it can’t hurt to ask. If they can’t or won’t contribute to your health insurance costs, get documentation to prove you lost your benefits. Then, explore whether COBRA, a marketplace plan or Medicaid might work.
Deb Gordon is the author of The Health Care Consumer’s Manifesto (Praeger 2020), a book about shopping for health care, based on consumer research she conducted as a senior fellow in the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government between 2017 and 2019. Her research and writing have been published in JAMA Network Open, the Harvard Business Review blog, USA Today, RealClear Politics, TheHill and Managed Care Magazine. Deb previously held health care executive roles in health insurance and health care technology services. Deb is an Aspen Institute Health Innovators Fellow and an Eisenhower Fellow, for which she traveled to Australia, New Zealand and Singapore to explore the role of consumers in high-performing health systems. She was a 2011 Boston Business Journal 40-under-40 honoree and a volunteer in MIT’s Delta V startup accelerator, the Fierce Healthcare Innovation Awards and in various mentorship programs. She earned a BA in bioethics from Brown University and an MBA with distinction from Harvard Business School.
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