Health insurance in the United States is often linked to employment,[0] which means keeping coverage can become an added stress if you’re laid off or need to leave your job.
Fortunately, there are several options for obtaining health insurance when you’re unemployed.
1. Buy your own plan through the ACA Marketplace
Self-purchased individual and family health insurance is available nationwide through the Marketplace/exchange in each state. These ACA-compliant plans can be purchased during the annual open enrollment period – Nov. 1 to Jan. 15 in most states – or during a special enrollment period (SEP).
If your employer-sponsored health coverage is ending because you’re leaving your job, the loss of coverage is a qualifying life event that will make you eligible for a special enrollment period (SEP). You’ll be eligible to enroll in a Marketplace plan in the 60 days before or after the loss of your employer-sponsored coverage.[1] If you enroll during the 60 days after your employer-sponsored plan ends, you’ll have a gap in coverage, since your new plan won’t take effect until the first of the month following your enrollment.
Most people with Marketplace coverage – 93% as of early 2024[2] – qualify for advance premium tax credits (APTC, or premium subsidies). APTC is paid by the government, directly to the enrollee’s health insurer. This reduces – or in some cases, eliminates – the monthly premium that the enrollee has to pay for their coverage.
Premium subsidy amounts depend on your household income relative to the cost of your coverage, so they vary from one person to another. But the average Marketplace enrollee’s after-subsidy premium in 2024 was only $105/month[3]
The Marketplace also offers cost-sharing reductions if your income isn’t more than 250% of the federal poverty level and you choose a Silver-level plan. Cost-sharing reductions result in lower out-of-pocket costs when you need to use your coverage.
A note about household income: Your eligibility for APTC and cost-sharing reductions is based on an (MAGI). Your MAGI includes your income for the entire year, even if you only have Marketplace coverage for a few months of the year.
If APTC is paid on your behalf for Marketplace coverage, you’ll have to reconcile it on your tax return the following spring. At that point, your actual MAGI for the full year will be known and will be used to calculate your actual premium tax credit. You may have to repay some of your APTC to the IRS (if your income for the year ends up being more than you projected it would be), or you may receive additional money from the IRS if your APTC was too low.
Most states use HealthCare.gov as their Marketplace, but some states run their own health insurance Marketplace. Regardless of where you live, you can start at HealthCare.gov and you’ll be directed to the correct website if your state doesn’t use HealthCare.gov.
You can also buy health insurance directly from an insurance company during open enrollment or a special enrollment period. But premium subsidies and cost-sharing reductions are not available outside the Marketplace.
2. Continue your group coverage with COBRA
If you’re eligible for COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) continuation coverage, you can temporarily keep the same coverage you had when you were employed. This means you won’t have to start over at $0 with a new deductible and out-of-pocket limit (as would be the case if you switched to a new plan) and you’ll still have the same provider network and coverage details you had while you were employed.
Even if you’re offered COBRA, you also have the option to buy new coverage in the Marketplace, as described above. Learn more about how to decide between COBRA and a self-purchased policy.
If you’re offered COBRA, you have 60 days to decide whether you want to accept it.[4] If you elect COBRA at any point during that window, your group coverage will continue without any gaps.
In most cases, you can use COBRA for up to 18 months, but there are some scenarios in which coverage can be continued for up to 29 or 36 months.[5]
Some employers might provide COBRA subsidies as part of a severance package. But in most cases, people are responsible for the full cost of their coverage while using COBRA. This means you’ll pay the full premium, including the share your employer used to pay – which is typically the majority of the price[6] – as well as a 2% administrative fee.[7]
3. Medicaid: Free coverage, depending on your income
Depending on where you live and how much you’re currently earning, you might be eligible for free Medicaid health coverage.
If you live in a state that has expanded Medicaid eligibility, you can enroll in Medicaid if your income is up to 138% of the federal poverty level. (If your income is above that level, you may be eligible for the Marketplace premium subsidies described above.) And unlike Marketplace subsidy eligibility, which is always based on total annual household income, Medicaid eligibility can be determined based on annual household income or current monthly household income.[8]
Ten states haven’t expanded Medicaid eligibility as of 2024. In nine of them (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, and Wyoming), there’s a coverage gap for people whose income is below the federal poverty level. (in Georgia, Medicaid is available if you’re working at least 80 hours per month.[9]). But as long as your income is at least the federal poverty level in those states, you can qualify for Marketplace premium subsidies.
4. Join your spouse’s health plan
If you’re losing your job and access to your own employer’s health plan, you may find that you can get coverage under your spouse’s employer-sponsored health plan.
Your spouse’s employer will be able to tell you how much it will cost to join the plan, and explain the coverage details. As is the case with any new plan you join (all options other than COBRA), your deductible and annual out-of-pocket spending will reset to $0 when you join your spouse’s plan (meaning you’ll be starting over on those costs with the new plan, regardless of how much you had already paid in out-of-pocket costs under your previous plan). So be sure you understand how much you might have to pay in out-of-pocket costs for the rest of the year under that plan.
The loss of your previous coverage counts as a qualifying life event that allows your spouse to add you to their employer’s health plan. If both you and your spouse were enrolled in your employer’s plan, the loss of that coverage will allow both of you to enroll in your spouse’s plan at that point, assuming coverage is available through your spouse’s employer.[10] Either way, you’ll only have 30 days to enroll after the loss of your previous coverage.[11]
5. Short-term health insurance
A short-term health insurance policy is probably not your best choice for health coverage while you’re unemployed for the reasons detailed below. But it could be useful if you only need coverage for a few months until another plan starts. Short-term health plans sold or issued on Sept. 1, 2024 or later can only last for up to four months, including renewals, and are not available in all states.
Short-term health insurance is not comprehensive coverage and is not a substitute for ACA-compliant major medical health coverage. And if you’re losing employer-sponsored coverage due to a job loss, you have other options besides short-term health coverage. The loss of your previous coverage will grant you a special enrollment period during which you can enroll in ACA-compliant coverage through the Marketplace in your state, or another employer’s health plan (including your spouse’s) if one is available to you.
If you opt for a Marketplace health plan, you can cancel it at any time. So you can use a Marketplace plan even if you’ll only need it for a few months. The plans available in the Marketplace are fully compliant with the ACA, which means they will cover the ACA’s essential health benefits and pre-existing conditions. Short-term health plans do not provide these health benefits and consumer protections.
But if you don’t enroll for a Marketplace plan or join your spouse’s plan during your special enrollment period, you won’t be able to enroll in either option until the next annual open enrollment period. In that case, a short-term health plan might be your only option for the time being, and it can provide some coverage for up to four months.
Be sure you check first to make sure you’re not eligible for Medicaid, which allows year-round enrollment for people who qualify for the coverage.
If you do choose a short-term health plan, it’s important to understand the termination of a short-term health plan is not a qualifying life event for individual market coverage.[12] So you would not be able to transition to a Marketplace plan due to the loss of the short-term plan. The termination of a short-term plan is, however, a qualifying life event for employer-sponsored coverage.[13] So if an employer’s plan is available to you, you would have a special enrollment period to enroll in that plan due to the termination of a short-term policy.
