Many Americans receive health insurance as an employee benefit; losing that benefit adds to the stress of being laid off. Between March 13 and April 11, 2020, the number of unemployment claims has reached 22 million. Approximately 9.2 million workers likely lost their employer-sponsored health insurance during that time. If you’ve lost your employer-sponsored health insurance, and you don’t have access to a plan through your partner's employment, you have two main options: buying a plan through the Health Insurance Marketplace or enrolling in COBRA coverage. Let’s take a look at these two main options, as well as other potential sources for health insurance after you’ve lost your job.
The Health Insurance Marketplace
If your insurance was partially paid by your employer, you realize how expensive that cost can be when you now are faced with the entire bill, but thankfully you have options. According to Healthcare.gov, if you leave your job for any reason and lose your job-based insurance, you can buy a Marketplace plan. Losing employer-sponsored coverage means you qualify for a special enrollment period and can buy insurance outside the annual open enrollment period. Typically, you have 60 days from the day you lose your coverage to enroll. Marketplace plan coverage can start the first day of the month after you lose your insurance. For example, if you lose your insurance plan on March 7 and select a Marketplace plan by March 31, coverage can start April 1.
The first step is to create an account as soon as you plan to apply. Before logging in you can preview income-based Marketplace plans and pricing estimates based on your income. You may be asked to provide proof that you lost your job-based insurance. Your eligibility notice will explain how to verify your loss of coverage or the Marketplace may contact you directly for verification.
After filling out an application, you’ll find out if you qualify for reduced monthly premiums and out-of-pocket health care costs. Assistance is based on estimated income for your household during the full calendar year you want coverage, not your employment status. Household income estimates should include any unemployment benefit income, as well as most traditional IRA and 401(k) withdrawals, annuities, child- or spousal support payments, and severance package income, if applicable. It’s important to immediately update your income information if your income changes, even after enrolling in a Marketplace plan, to ensure you get the correct savings, and to avoid potential tax penalties later on if your income increases.
On April 28, 2020, the Department of Labor (DOL) Employee Benefits Security Administration (EBSA) announced compliance guidance and further relief for employee benefit plans, qualified beneficiaries, and other plan members impacted by the ongoing COVID-19 outbreak. This guidance extends the time periods in which participants can submit claims for coverage, elect and pay for COBRA continuation coverage, enroll in group health plan coverage, and file appeals for adverse benefit determinations.
This extension relief provides additional time for impacted participants and beneficiaries when calculating:
· the date by which members may file claims for benefits under the plan’s generally applicable claims procedures (essentially extending the run-out period for reimbursement by health plans, healthcare flexible spending accounts (FSAs) or health reimbursement arrangements (HRAs) until the end of the COVID-19 outbreak);
· the 60-day election period for electing COBRA coverage;
· the date by which COBRA premium payments must be made;
· the 30-day period to exercise special enrollment rights under HIPAA (or the 60-day period, in the case of the special enrollment rights added by the Children’s Health Insurance Program Reauthorization Act of 2009) for major medical plans and other non-excepted benefits (e.g., following the addition of a spouse through marriage or the addition of a child through birth, adoption, or placement for adoption);
· the date by which an individual must notify the plan of a qualifying event (e.g., divorce or legal separation) or a Social Security disability determination; and
· the date by which claimants may file an appeal of adverse benefits determinations or request external review after receipt of an adverse benefit determination or a final internal adverse benefit determination.
For more information about the updated guidance, see the Health Insurance Marketplace’s FAQ document.
Not every applicant will qualify for help paying monthly premiums or out-of-pocket expenses. Some applicants may qualify for free or low-cost coverage from Medicaid or the Children’s Health Insurance Program (CHIP). Medicaid provides coverage to those with limited incomes or disabilities, while CHIP provides coverage for children, and in some states, pregnant women, in families with incomes too high for Medicaid but too low to afford private insurance.
As long as you don’t have another qualifying health coverage offer, you can enroll in a Marketplace plan and remain eligible for any income-based premium tax credits and other savings; you may leave a Marketplace plan at any time without penalties.
The Healthcare Marketplace does have some restrictions on potential savings if you’re offered coverage through your spouse or partner’s job. Even if you don’t choose to accept the offer, you aren’t eligible for premium tax credits or other savings on a Marketplace plan. The only exception is if your spouse’s plan doesn’t meet certain standards for affordability or coverage. It’s rare for a plan to not meet these standards, even if they charge high premiums for spouse and dependent coverage.
Once you are working again, even if you are eligible for healthcare benefits through your new job, you can continue coverage until your new job-based insurance starts and qualify for savings on a Marketplace plan based on your updated income. If you do not choose to enroll in the new job-based insurance, you can keep the Marketplace plan at full price.
You may be able to keep your job-based health plan through COBRA continuation coverage. The continuation coverage under COBRA is a valuable component of an employee benefits package. With health care costs continuing to rise, having the option of continued coverage can be invaluable. COBRA is a federal law which requires an employer with more than 20 employees who maintains a group health insurance plan to provide terminated or reduced-employment employees with an option to remain covered by the employer’s existing plan for a specified period of time (usually 18 months), if the employees or their family members lose coverage due to certain events.
To qualify for continuation coverage, an employee must be a participant in the employer’s group health insurance plan. Spouses, qualified partners, or dependent children are considered qualified beneficiaries if they were covered by the plan at the time of the employee’s termination or reduction in work. If a qualified person wants to receive continuation coverage, they must elect to do so within a 60-day election period, and coverage must be provided during the 60-day period beginning on the date coverage would otherwise have lapsed. If a plan participant waives his or her right to elect continuation coverage during the 60-day period, the waiver may be revoked at any time up to the end of the 60-day period. The employer is not required, however, to provide retroactive coverage in this situation.
Under COBRA, you are responsible for up to 102% of the employer’s health insurance premium during the continuation period. The extra 2% is intended to reimburse the employer for administrative costs associated with providing continuation coverage. Employees who did not elect coverage for themselves, their spouses, or their dependents previously may not elect continuation coverage that is broader in scope than the coverage they were provided during their employment. The first step is to contact your employer’s HR representative to learn what your options are.
If you've already signed up for COBRA coverage, find out if you can switch from COBRA to a Marketplace health plan.
Private Market Alternatives
Health insurance plans are offered outside the Marketplace, typically from private insurance companies, directly, online, or through insurance brokers. If you buy a plan outside the Marketplace any time, during Open Enrollment or not, you can’t get premium tax credits or other savings based on your income. Be aware these plans, though lower cost, may have gaps in coverage vs. marketplace plans. Understand the fine print, as an insurer on a private plan may not cover your family’s specific provider, pre-existing condition, or prescription needs.
While, as of the 2019 plan year, the federal Shared Responsibility Payment–a fee for individuals who can afford but choose not to purchase qualified health insurance plans–no longer applies, some states have their own individual health insurance mandate, requiring you to have qualifying health coverage or pay a fee with your state taxes for the 2019 plan year. If you live in a state that requires you to have health coverage and you don’t have coverage (or an exemption), you’ll be charged a fee when you file your 2019 state taxes.
Losing your employer-sponsored health insurance coverage may mean some changes, but it doesn’t have to add disproportionally to the stress of unemployment. If COBRA is an option, begin by contacting your former employer’s HR or benefits representative. Explore the Health Insurance Marketplace for information on available plans, enrollment periods, and potential assistance with your healthcare costs. Knowing your health insurance coverage options can provide peace of mind for you and your family. Combined with a SAVVI financial plan, you’ll be equipped to make a confident and informed health insurance decision.
If you've been financially impacted by the Coronavirus crisis, click here to fill out our interactive questionnaire and determine whether you qualify to receive a no-cost, targeted financial plan from SAVVI. The SAVVI plan will take into account the effects of the immediate crisis to help you navigate this difficult time, as well as help you keep working toward your future retirement goals.
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