COVID-19 and the pandemic have resulted in both voluntary and involuntary job losses. However, lost wages may not be their biggest concern because many people are moving to freelance and contract positions. What to do about healthcare, on the other hand, may be a bigger concern. Even before COVID-19, millions of Americans were living without healthcare. According to the Kaiser Family Foundation (KFF), the number of uninsured, nonelderly Americans has risen from 26.7 million in 2016 to 28.9 million in 2019. This equates to an increase from 10.0% of the population in 2016 to 10.9% in 2019.
The Rising Cost of Healthcare
Most Americans are concerned about accessing and paying for healthcare as a result of the COVID-19 pandemic. The rising cost of prescription drugs, as well as concerns about contracting COVID-19, highlight the importance of having some form of health insurance.
Option 1: COBRA
If you have recently lost your job and employer-sponsored health insurance, you may qualify for coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). Qualified individuals may be eligible to keep the same health insurance they had while employed but may be required to pay up to 102% of the plan’s cost.
Employers with 20 or more employees in the prior year are generally required to offer continuing healthcare coverage to former employees and their families. Covered services include:
- Inpatient and outpatient hospital care
- Physician care
- Surgery and other medical benefits
- Prescription drugs
- Dental and vision care
Within 90 days of losing coverage, employees are given a Summary Plan Description that includes a description of the healthcare benefits. Furthermore, the employer must notify qualified beneficiaries of their right to choose COBRA coverage within 14 days. After receiving the election notice, the beneficiary has 60 days to decide whether or not to elect coverage. Beneficiaries are entitled to continuation coverage for a minimum of 18 to 36 months.
COBRA insurance may appear to be the simplest option because it allows you to keep your current insurance, but it is rarely the best option. In the past, you could have been denied coverage on the marketplace because of a pre-existing condition, but this is no longer the case. COBRA is only useful as a stop-gap insurance if you require access to a specific provider who is not in another network, are about to qualify for Medicare, or have already met your deductible for the year.
Option 2: Add Yourself to Your Spouse’s Plan
Loss of employment and health insurance is a qualifying life event, so if your spouse carries health insurance, you may be able to join their plan. If you are under the age of 26, you may be able to enroll in your parent’s health insurance plan.
Option 3: Buy a Health Plan through the Marketplace
Because losing your job is a qualifying life event, you can shop for coverage on the marketplace even if open enrollment is not effective. You will have 30 to 60 days after your qualifying life event before your special enrollment period expires. Standard open enrollment periods vary by state but typically run from November through January. Most states operate their plans through the federal marketplace at Healthcare.gov.
After completing a Marketplace application, you will learn if you are eligible for any income-based discounts. If you qualify for a premium tax credit, it will lower your monthly insurance bill. These tax credits are available to anyone with income between the poverty level and 400% of that amount. Those who earn between the poverty level and 250% poverty are eligible for cost-sharing reductions that can reduce their deductibles and copayments. You can use KFF’s Health Insurance Marketplace Calculator to estimate the cost of marketplace plans. You will also be able to preview the available plans and their associated costs.
Option 4: Buy a Health Plan Off-Exchange
If you are unlikely to qualify for an income-based discount on the marketplace, you may want to consider purchasing an off-exchange health insurance policy. These policies are typically available online or through an insurance broker.
Option 5: Short-term Health Plans
If you believe you will only need health insurance for a short period, generally less than a year, and you don’t have any significant health expenses, a short-term health plan may be appropriate for you. Short-term plans are renewable every few months and can last up to a year. However, these plans do not cover pre-existing conditions or Essential Health Benefits.
In addition to shopping for health insurance, consider the following ways to save money:
- Shop around: The cost of healthcare is highly variable. So, if you need labs, X-rays, or even routine medical care, call around to compare prices.
- Payment plans: Ask your healthcare provider if they offer payment plans. This option may make the costs manageable until you have an income again.
- Consider telemedicine: Online telemedicine services are frequently less expensive than in-office care.
- Discount coupons: Check with online discount prescription coupon providers to see if discounts are available for your prescriptions and compare prices at your local pharmacies.
It is stressful to plan for a major life change. It is, however, even more stressful if you have not planned ahead of time. Working with a wealth manager can help you make the best financial decisions for you and your family.