Medical Insurance Options for the Unemployed

Layoffs are rampant.

Americans are worried about their jobs, and rightfully so. And for those Americans who recently lost their jobs, one of the questions may regard the insurance benefits their employers provided.

MainStreet spoke with Paul Fronstin, senior research associate at the Employee Benefit Research Institute (EBRI), for some answers.

MS: What should someone who lost their job do about health insurance?
PF: For someone who loses their job, they will most likely be able to continue coverage on COBRA, which may not be the best option for them.

MS: What are the disadvantages of COBRA?
PF: COBRA coverage lasts for 18 months and it covers the former employee and their family. [The disadvantage] is that it is expensive. Switching to COBRA changes the payment from a portion of the premium to the full premium, along with a 2% administrative fee. When a worker gets coverage through an employer the value of that coverage is not included in taxable income (pre-tax). When a worker takes COBRA, the value of that coverage does not reduce taxable income (post tax).

MS: What if their spouse still has insurance?
PF: Someone who just lost their insurance as a result of a job loss, should look to their working spouse. Now, you don’t have to wait until open enrollment to join the spouse. [And] you don’t have to worry about being excluded due to the qualifications.

Before, it didn’t matter whether your spouse worked or not, employers didn’t discriminate based on family coverage. Today, they’re more likely to do so. If you lose your job, your spouse can most likely cover you. If you are working and you lose coverage you can switch to your spouse’s plan without having to wait for open enrollment. If you never worked and never had coverage, you can’t join your spouse’s plan whenever you want. You will have to wait for open enrollment.