What to Do If You Lose Your Health Insurance

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Economic havoc from the coronavirus pandemic is just getting started. As layoffs surge, millions of Americans face losing their health insurance along with their livelihoods.

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Under normal circumstances, you might tolerate the risk of being temporarily uninsured in between jobs. This is not the time to go without health insurance if you can avoid it. COVID-19 amplifies both your risk of needing health care and of having challenges paying for that care.

You can’t control whether you lose your job and your benefits because of COVID-19. You can, however, take steps to protect yourself in case you wind up without health insurance during the global pandemic.

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In the best of times, even highly educated consumers often have no idea where to start when it comes to navigating health insurance. There is no shame in being confused or overwhelmed.

Don’t panic. Take a breath. Collect yourself. And then make a plan.

1. If you have a spouse with insurance, try to get on their plan

If you have a spouse or partner with employer-sponsored insurance, you may be able to join if you lose your job or your benefits due to a furlough or other cuts. For those worried they could soon lose their jobs, have your spouse or partner contact their human resources department to see if you can join their plan. You probably won’t be able to get on that plan without a change in your benefit status, but get the details on how to make that change now so that you’ll be prepared.

2. Explore COBRA

If you lose your job at any time, you may be legally entitled to buy into your employer’s health insurance plan for a period of time. The Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, gives you the right to buy this coverage for as long as 18 months (longer if you’re approaching Medicare eligibility), provided you’re willing to pay for it.

Because employees pay the full cost of health insurance premiums without any employer contribution, COBRA tends to be very expensive — prohibitively so for most people. On an annual basis, the average employer-sponsored insurance premium for family coverage was more than $20,000 in 2019 and more than $7,000 for an individual. Under COBRA, the employee pays the full premium and may be charged a small administrative fee. These costs may be especially hard to bear without income. However, if you have a chronic condition or already know you will need expensive care, it may be worth it.

If your company has at least 20 employees, it is likely subject to COBRA rules. In that case, they are obligated to notify you about this option if they terminate your employment. In the meantime, you can proactively check with your human resources representatives to see if it is an option for you, and if so, what it would cost.

If you are furloughed, you may eligible for COBRA if you lose eligibility for the group health insurance plan. Your company will have to issue you COBRA documents in that case; make sure to get those so you can qualify.

2. Check out the health insurance marketplace

The Affordable Care Act (ACA) created health insurance marketplaces operated either by the states, the federal government, or as a state-federal partnership. Everyone has access to one of these marketplaces where individuals can compare an assortment of plans with varying costs and coverage levels.

Even the most basic marketplace plans offer comprehensive benefits and consumer protections. Though buyer beware: The lower the monthly premium, the higher the deductible and other cost-sharing components are likely to be.

Typically, these marketplaces are only open during specific “open enrollment” periods, but a few states have opened up enrollment now to help uninsured residents get covered during this crisis. Other states may follow.

Even if your state does not offer a special enrollment period, you may still be able to sign up. Life events like a marriage, a move, or a job loss or change are typically deemed “qualifying events,” during which you can enroll outside of the open enrollment window. Losing your job or your benefits, including from a furlough that results in losing eligibility for the group insurance plan, is just the sort of life event for which these exceptions are designed. But don’t delay. Marketplace insurance usually takes effect on the first day of the following month or the one after that, depending on when you apply.

Depending on your financial situation, you may qualify for free or subsidized insurance. Even if it’s just for a transitional period, these programs provide comprehensive coverage, often at reduced cost. Visit healthcare.gov or your state’s health insurance marketplace to learn more about your specific situation.

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3. Consider applying for Medicaid

Medicaid is the publicly funded health insurance program designed to cover the most vulnerable and low-income people. It operates as a federal-state partnership, with certain rules set at the federal level and specific administration handled at the state level. As result, eligibility rules vary depending on where you live, how many people live in your household, what your income is, and whether you have any special conditions. Under the ACA, 37 states and the District of Columbia expanded their Medicaid programs to allow for greater flexibility in expanding coverage to more residents.

Medicaid is highly regulated, with substantial consumer protections. It offers robust benefits at free or very low cost to enrollees. Depending on the state, eligibility may start retroactively as of the day you apply. Even if it takes time to determine if you’re eligible, if you ultimately are, you may be fully protected from health costs you are forced to incur in the meantime.

Though some people hate the idea of getting help to pay for anything or of getting help from the government, this is not a moment to worry about stigma. If you need coverage, and you qualify for this program, take the opportunity to protect yourself financially.

4. Ask for help

Health insurance has its own jargon, convoluted rules and bureaucratic hurdles. Trying to sort it out on your own at any time can be completely overwhelming. In a crisis when the world seems to be holding its breath waiting for catastrophe to strike, you’re probably not in the best position to navigate all on your own.

The good news is, you may not have to.

Start with your company’s human resources; they may be able to help you transition off of their plan. You can also call the state or federal health insurance marketplace. Even if you have to wait on hold or encounter bureaucratic-style customer service, don’t give up. If you don’t get a clear answer or the help you need, call back another time or ask for a supervisor. There is always someone who can get to the bottom of your situation. It just may take some patience.

Though federal funding was slashed for insurance navigators, nonprofit organizations still exist in many places to help consumers find health insurance options. Often operating locally or at the state level, helpers are out there. Start at the federal website and Google your way to help in your area. Look for nonprofit agencies whose mission is to help, rather than for-profit companies that may be trying to sell you less-than-robust insurance coverage.

Hospitals and health centers often employ financial counselors whose jobs are to help patients find health insurance. These staff are often extremely well versed in the intricacies of insurance rules and options. Call the clinic or the hospital you would most likely go to for care if you get sick, and ask them for help finding and applying for coverage.

More than 150 million Americans get their health benefits through an employer. COVID-19 may push that number way down. It is no time to be without health insurance. If you find yourself in that situation, remember that there are options. While you might be waiting for the worst to happen, get yourself prepared. Figure out where to turn if you need to get covered in a hurry.

Then, stay home. And wash your hands.

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Deborah Gordon is author of "The Health Care Consumer's Manifesto: How to Get the Most for Your Money" (Praeger). She spent two decades in health care leadership, including as a health insurance executive and health tech CEO. She is an Aspen Institute Health Innovators Fellow, an Eisenhower Fellow, and a former Senior Fellow at the Harvard Kennedy School's Center for Business and Government. She has a BA from Brown University and an MBA with distinction from Harvard Business School.