Minneapolis, MN – In the United States, more than 158 million people get health coverage through employer-sponsored insurance, making the loss of coverage one of the top concerns in the event of a layoff. Now, with an increase in layoff announcements, healthinsurance.org is offering several tips to help consumers stay insured if they lose their employer-sponsored coverage.
“Layoffs create a double hardship for many people because they result not only in the loss of income, but also in the loss of health insurance benefits,” said Louise Norris, health policy analyst for healthinsurance.org. “Health insurance is a primary way many families protect themselves from health and financial risks, so it’s important for consumers to know they have coverage options if they experience a layoff.”
1. Take advantage of the special enrollment period to sign up for ACA coverage
Individuals who lose their employer-sponsored insurance due to a job loss can enroll in ACA-compliant health coverage during a special enrollment period (SEP).
“The Affordable Care Act included special enrollment periods as a way to protect consumers whose life circumstances have changed in a way that results in the loss of health coverage,” said Norris. “These special enrollment periods offer a limited opportunity to enroll in comprehensive replacement coverage – usually without a gap in coverage.”
Special enrollment periods for individual and family ACA coverage typically are 60 days long, beginning at the time of a qualifying life event. But if the qualifying life event is the loss of other health coverage, the special enrollment period can start as early as 60 days prior to the loss of coverage. This advance enrollment window allows an employee to sign up for ACA coverage and have it take effect the first of the month following the termination of their employer-sponsored coverage. And a new rule took effect in 2024 that allows enrollees in most states to avoid a gap in coverage even if their old plan is ending mid-month.1
As during open enrollment, consumers buying coverage during an SEP may be eligible for subsidies to help reduce the cost of their insurance coverage. As a result of the American Rescue Plan and Inflation Reduction Act (IRA), subsidies in recent years have been larger and available to more enrollees compared with previous years, saving Marketplace enrollees an average of $800 per year.2
2. See if you can enroll in another employer-sponsored plan
If coverage is available through another employer’s plan – either through a spouse’s employer coverage or through a second job – that coverage will also have a special enrollment period.3 However, special enrollment periods for employer-sponsored plans generally only continue for 30 days after the loss of other coverage.
3. Find out if you qualify for Medicaid
Before seeking ACA coverage through a special enrollment period, individuals and families may want to understand the eligibility requirements for Medicaid. Medicaid provides health insurance coverage to qualified families with low income, pregnant women, children, and other eligible people. Eligibility varies by state; 40 states and the District of Columbia have expanded Medicaid eligibility to cover more individuals with lower incomes.
“Medicaid may be an option if you have just been laid off and can’t afford other health coverage and meet your state’s eligibility requirements, either for yourself or for your family,” Norris said. “It never hurts to check your eligibility to see if you qualify, particularly if you live in a state that has expanded Medicaid.”
And Medicaid eligibility can be determined based on annual income or current monthly income, so a person between jobs may be eligible based on their current lack of income – even if their income earlier in the year, before the job loss, would have been too high to qualify for Medicaid. This differs from subsidy eligibility in the Marketplace, which is always based on total annual income. Keep in mind there is no enrollment period for Medicaid, so individuals who reapply in the future can do so at any time of the year.
4. Continue your coverage through COBRA or state continuation coverage
Individuals losing their job may be able to continue coverage through their employer-based health plan even after employment ends. Under federal law, employees are eligible for COBRA coverage for up to 18 months after a job loss involving an employer with 20 or more employees. And many states have “mini-COBRA” rules that allow for continuation of coverage when an employee works for a smaller business. However, under COBRA or mini-COBRA, the consumer must pay the full cost of the premium on their own, including the amount their employer was previously paying, plus an administrative fee.4 That said, some employers may cover some or all of the cost of COBRA for at least a few months as part of their severance package.
“If you’re happy with your current coverage and can afford to take over the full cost of the premium, continuation coverage is a great option,” Norris said. “The portion of the premium you pay will likely be quite a bit more than you were paying when you were employed, and you won’t be able to access any subsidies that you might have been eligible for in the marketplace. But you won’t have to start over mid-year with a new deductible and out-of-pocket exposure. Never just assume COBRA is your best coverage option, but it’s definitely an option to explore.”
5. Consider enrolling in a short-term health plan
Consumers can also enroll in short-term health insurance at any time of the year. Short-term plans generally do not cover pre-existing conditions and are not required to cover the essential health benefits covered by ACA plans. So review short-term plan details carefully before enrolling.
Consumers also need to be aware that there are no subsidies available to offset the cost of short-term health insurance. Depending on a person’s circumstances, this could mean that a short-term plan ends up having higher premiums than a Marketplace plan, despite having fewer benefits.
“If you’ve just been laid off, or expect to be laid off, you have options for keeping health coverage in place,” Norris said. “Find out what makes the most sense for your situation, and make sure you have a plan for staying covered.”
Healthinsurance.org provides online resources for consumers about individual and family health insurance. Healthinsurance.org, owned by Healthinsurance.org, LLC, has been providing consumer information about health insurance and health reform for over 25 years.
Contact:
Amy Fletcher Faircloth [email protected]
Footnotes
- “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment” page 257, CMS.gov. Accessed March 12, 2024 ⤶
- “Anniversary of the Inflation Reduction Act: Update on CMS Implementation” CMS.gov. Aug. 16, 2023 ⤶
- “§ 2590.701-6 Special enrollment periods.” ECFR.gov. Accessed March 12, 2024 ⤶
- “COBRA Continuation Coverage” CMS.gov. Accessed March 12, 2024 ⤶