Health insurance for the unemployed

Can I enroll in ACA marketplace insurance as soon as I’ve lost my job?

If you’ve lost your job-based health insurance – whether due to layoff or other termination – you’ll likely be able to enroll in an ACA-compliant health plan and not face a gap in coverage. The loss of your employer-sponsored coverage will make you eligible for a special enrollment period (SEP) due to the loss of your employer-sponsored health plan.²

And thanks to federal legislation, the American Rescue Plan (ARP), that enhanced ACA premium subsidy eligibility for millions of consumers, you’re more likely than ever to find Marketplace coverage that’s subsidized – and you won’t have to wait for the next annual open enrollment period to enroll if you’re eligible for a SEP.

(To clarify, Marketplace subsidies are more widely available under the ARP because that legislation removed the upper income limit for subsidy eligibility and reduced the percentage of income that people are expected to pay for their coverage. These changes made subsidies larger and available to more people,³ and they were extended through 2025 by the Inflation Reduction Act.)

How long is the special enrollment period for ACA coverage if I lose employer-sponsored health coverage?

Your special enrollment period starts 60 days before your current employer-sponsored plan ends. If you enroll in Marketplace coverage prior to your coverage loss, your new plan will take effect the first of the month after your old plan ends, which means you’ll have seamless coverage if your old plan is ending on the last day of the month.

In most states, you also have the option to avoid a gap in coverage even if your old plan is ending mid-month. This option will let you enroll before the month that your old plan ends and have your new plan start the first of the month that your old plan ends.

You’ll then have an overlap in coverage for the first part of that month, instead of a gap in­ coverage for the latter part of the month (you would be responsible for your portion of the employer-sponsored plan premium as well as your portion of the premium for the new plan during the overlapping coverage days).⁴ (This option to have overlapping coverage instead of a gap in coverage is available in the 32 states that use HealthCare.gov, but optional for the 19 state-run exchanges.)

Your special enrollment period also continues for 60 days after your coverage loss, although you’d have a gap in coverage if you wait and enroll after your old plan ends, since your new plan can’t take effect retroactively.

If you’re in that situation, you might find that a short-term health plan is a good option for bridging the gap until your new plan takes effect. Short-term plans won’t cover pre-existing conditions and are not regulated by the Affordable Care Act (ACA).⁵ So it’s important to understand that they are not suitable to serve as a long-term coverage alternative.

What can I do if my income is too low for ACA subsidies?

In order to qualify for premium subsidies for a plan purchased in the Marketplace, you must not be eligible for Medicaid, premium-free Medicare Part A, or an affordable employer-sponsored plan (defined as costing no more than 8.39% of household income in 2024) – and your income has to be at least 100% of the federal poverty level (unless you’re a recent immigrant).

In most states, the ACA’s expansion of Medicaid eligibility provides coverage to adults with household income up to 138% of the federal poverty level,⁶ with eligibility determined based on current monthly household income (not annual household income). So if your income has suddenly dropped to $0, you’ll likely be eligible for Medicaid and could transition to Medicaid when your job-based coverage ends. (See more on this below.)

Unfortunately, there are still nine states where most adults face a coverage gap if their household income is below the federal poverty level.⁷ They aren’t eligible for premium subsidies in the Marketplace, and also aren’t eligible for Medicaid.

And keep in mind that subsidy eligibility in the Marketplace is based on your household income for the whole year, even if your current monthly income is below the federal poverty level. So if you earned enough earlier in the year to be subsidy-eligible, you can enroll in a plan with subsidies based on that income, despite the fact that you might not earn anything else for the rest of the year.

But be aware that if you get rehired at a new job later in the year, the income from that job will be counted as part of your total household income, and could affect whether you have to repay some or all of the subsidy that was used to reduce your premium payments. Also know that if you become eligible for a new employer’s health plan later in the year, you will no longer be eligible for subsidies in the Marketplace as of the month that you could enroll in the employer’s plan (assuming the employer’s plan is considered affordable and provides minimum value).

Should I use COBRA to continue my employer-sponsored coverage?

If you’re eligible for COBRA continuation coverage, you can use this to temporarily maintain the group health insurance coverage you had while you were employed. You’ll also have the option to obtain individual/family coverage, as described above. Read our article about how to decide between COBRA and a self-purchased policy.

Since I was laid off, is Medicaid an option for me?

Medicaid may be an option for you, depending on where you live. If you’re in a state that has expanded Medicaid, coverage is available if your income is up to 138% of the federal poverty level. (Above that level, premium subsidies are available, ensuring that Marketplace enrollees do not have to pay more than 8.5% of their income for the benchmark plan.)⁸

If your state has not expanded Medicaid, eligibility is significantly more restricted. (Read our summary of Medicaid eligibility guidelines for each state.) Contact your state Medicaid office or the exchange to see if you could qualify for Medicaid until you get another job.

Assuming you’re in a state that has expanded Medicaid, you’ll qualify for Medicaid during the time that you have no income. You can then switch to a private plan in the Marketplace (with subsidies if you’re eligible) or to an employer-sponsored plan if you get a job later in the year and your total annual household income is going to end up being more than 138% of the poverty level. You’ll have the opportunity to make that coverage change if and when your income increases.

If you’re in the coverage gap because you’re in a state that hasn’t expanded Medicaid and your income is below the poverty level, you’ll have an opportunity to enroll in a subsidized health insurance plan through the exchange later in the year if you find a job that puts your income at or above the federal poverty level (assuming the job doesn’t offer health insurance and you need to purchase your own coverage). This enrollment opportunity for people leaving the coverage gap was part of a rule change that took effect in 2015.

Should I enroll in my spouse’s health plan if I’m losing my job and my health insurance?

Enrolling in your spouse’s health plan might be a good option if you’re losing your job and your health insurance. The loss of your own employer-sponsored health coverage will count as a qualifying life event that allows your spouse to add you to your spouse’s employer’s health plan.⁹

You’ll want to find out how much your spouse’s payroll deduction for the health plan will increase once you’re added to the plan. (Your spouse’s employer or HR representative will be able to provide this information.) You’ll also want to make sure you understand how the plan’s coverage will work in terms of any medications you take or any medical providers you’re currently seeing. It’s also important to understand that any accumulated out-of-pocket costs you accrued earlier in the year will not transfer to your spouse’s plan. You’ll be starting over at $0 in out-of-pocket spending, so you’ll want to make sure you know how much the deductible and other out-of-pocket exposure is on your spouse’s plan.

The special enrollment period for your spouse’s employer-sponsored plan will only last for 30 days.[footnote “29 CFR § 2590.701-6 Special enrollment periods” (Section (4)(i)) Electronic Code of Federal Regulations. Accessed April 5, 2024] So you have to make this decision sooner than you would have to for electing COBRA or enrolling in an individual/family plan.

Should I consider short-term health insurance if I'm getting laid off and losing my health plan?

In most circumstances, short-term health coverage is probably not going to be your best option if you’re losing your health insurance due to a job loss. Short-term policies are not comprehensive and cannot be considered a substitute for ACA-compliant health coverage. As described above, you’ll qualify for a special enrollment period that will let you enroll in other coverage, including an ACA-compliant individual/family plan, or another employer’s plan.

ACA-compliant plans are much more robust than most short-term health plans, due to the regulations ACA-compliant plans have to follow. For example — unlike ACA-compliant individual market policies — short-term policies do not have to cover essential health benefits, can impose caps on how much they’ll pay for covered care, and generally do not cover pre-existing conditions. And most people are eligible for subsidies that will cover some or all of the premiums for ACA-compliant coverage if they purchase the plan on the Marketplace.

But the opportunity to switch to an ACA-compliant plan after the loss of other coverage is time-limited. If you wait more than 60 days after you lose your job, you’ll find that you cannot sign up for ACA-compliant coverage (unless it happens to be during the annual open enrollment period). In that case, a short-term health plan might be considered your best choice, as your coverage options are generally limited at that point.

Before you opt for short-term coverage, you’ll want to check to see if you’re eligible for Medicaid, which is open year-round, or a state-run plan that has more enrollment flexibility, such as a Basic Health Program (available in New York and Minnesota, and Oregon as of mid-2024) or the state-funded coverage programs available in Massachusetts and Connecticut. But if there are no other options available, a short-term plan could be a solution to cover you until the next open enrollment period (or until you get coverage from a new employer or have a qualifying life event that provides a special enrollment period), if short-term plans are available in your state.