Getting laid off is stressful enough. You’re thinking about how you’ll continue to pay bills, avoid late or missed payments, and hopefully stay in your home and keep the lights on. Health insurance may not be top of mind, but you’ll need to start browsing options as soon as you can. The main options you have are COBRA, the health insurance marketplace, and short-term health insurance. Here’s how to decide which one is right for you.
What Is COBRA?
The Consolidated Omnibus Budget Reconciliation Act, or COBRA, allows you to continue your current employer-provided health insurance for a certain amount of time if you’ve been laid off, lose hours, change jobs, and a few other circumstances. However, your premiums will likely be more expensive than what you were paying when you were employed, because your employer typically pays for a certain portion of your premiums.
- Keep your current plan:COBRA lets you keep your current plan—if eligible—exactly the same, with the same services and features.
- Decent term length:Depending on your plan, regulations allow you to keep your COBRA coverage for 18 or 36 months.2
- Expensive choice: You’re on the hook for up to 102% of the plan cost, which may be more than you can afford to pay if you aren’t working or are working fewer hours.
- Exclusive eligibility:To be considered for COBRA, you must have an eligible plan and be a qualified beneficiary of a qualified event, like you lost your job or had your hours reduced. Also, federal employees and certain religious organizations are not eligible.
What Are Health Insurance Marketplace Plans?
The Affordable Care Act (ACA), enacted in 2010, expanded public health insurance so that individuals and families can get health care that covers 10 basic services, including pregnancy care and prescriptions.5
Sometimes referred to as “Obamacare,” the ACA established the health insurance marketplace to browse options based on where you live and the coverage you’re looking for.
The government subsidizes a portion of your premiums (via a “premium tax credit”) if your yearly income is 100% to 400% of the federal poverty level.8 If your income is greater than 400% of the federal poverty line, you may still qualify for some tax credit through the end of 2025, thanks to the passage of the Inflation Reduction Act.
What Is Short-Term Health Insurance?
Short-term health insurance is a type of insurance plan that provides temporary medical insurance during “in-between” stages, like if you’ve been laid off from your job and lost your coverage but don’t yet qualify for a new workplace health insurance plan. Short-term plans provide coverage for less than 12 months, but may be renewed for a duration no longer than 36 months in total.
These are different from health insurance marketplace plans, which have certain standards and minimum requirements that must be met to be on the exchange, like maternity care and preexisting condition coverage.