Many people in the United States get their health insurance through their employer, known as employer-sponsored health insurance. We’ll talk more about that below, but what happens if you don’t get your insurance through your work for any reason?
There are options ranging from Medicaid plans for low-income people to plans you can buy as a self-employed person. We talk about these options and what they entail.
What is Employer-Sponsored Insurance?
Employer-sponsored health insurance coverage is also known as a group plan. It was at one point a standard part of an employee benefits package, but not so much anymore. The rising healthcare costs in the U.S. have led many businesses to stop offering group plans.
When these plans are available, they provide healthcare coverage for the workforce of the business and their dependents. An employer chooses the plan and decides what it’s going to cover.
In most situations, the employers and employees share the costs of the premiums.
Under the Affordable Care Act, it became mandatory for businesses that have more than 50 full-time employees to offer insurance plans. A small business with fewer than 50 full-time employees doesn’t have to provide a health care plan.
Getting Health Insurance with No Income or Job
If you’re unemployed or don’t have an income, you can still get health insurance. Some options to know about include the following.
COBRA
If you lost healthcare coverage because you recently lost your job or the person who you depended on for insurance lost theirs, you could replace it through COBRA. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act.
Under COBRA, you have the right to stay enrolled under the group health plan of your old employer, but you pay for it out of pocket. It’s rare for the employer to continue contributing.
If you utilize COBRA, your health care coverage doesn’t change, and you can keep it for up to three years. If you got another job that will offer healthcare, but you’re in a waiting period, COBRA can also be a good solution.
The downside is that since your employer is very unlikely to pay for part of the costs, you could have to pay as much as 80% more.
If you’re eligible for COBRA, your employer has to notify your healthcare insurance company. You have up to 60 days to decide and pay your first premium, and there are some situations where assistance might be available to help you cover the costs.
The Affordable Care Act
The Affordable Care Act or ACA set up the Health Insurance Marketplace. Under the legislation, you can’t be charged more or refused insurance because of a pre-existing condition.
Based on your income, you might qualify for a discount on your premiums, known as a subsidy. You could also qualify for lower coinsurance costs.
If you’re interested in buying from the Health Insurance Marketplace, you can go directly to the website or work with an insurance broker. Every fall, there’s an Open Enrollment Period to update a plan or get new coverage.
If you miss the Open Enrollment Period, you might qualify for a Special Enrollment Period, which is immediate and requires that you lost previous coverage, gave birth, adopted, or got married to take advantage of.
Individual Private Insurance
Insurance companies can sell customers policies that don’t meet the requirements of the Affordable Care Act.
If you don’t qualify for the ACA, these policies can be quite a bit cheaper, but they don’t usually provide the ten essential benefit protections ACA plans are required to have.
You can buy private insurance directly from companies or through brokers, and these plans are sold year-round. If you want emergency coverage or preventative coverage with a low premium, you might opt for this.
High-Deductible Health Plans
A high-deductible health plan means that you pay a lot of money out-of-pocket before your coverage kicks in.
This out-of-pocket money is the deductible. The IRS says the deductible has to be at least $1,400 for an individual or $2,8000 for a family, but some deductibles are much more than this.
If you buy a high-deductible health plan, you can combine it with a health savings plan. That money can be something you save tax-free, and you set it aside to eventually pay for healthcare.
Short-Term Insurance
Some states have policies that are for emergencies or serve as bridge coverage.
These policies usually have dollar caps on your total amount of coverage, and they have major limitations. They are meant to be something you might use when you’re changing jobs, for example, or moving from employer insurance to Medicare.
Free or Low-Cost Health Insurance
If you’re low-income, some of the options above can still be available to you.
For low-income people, Medicaid is one option. Medicaid is an entitlement program where low-income people get access to government-based healthcare. Medicaid is comprehensive, covering a lot of services.
For most people who qualify, Medicaid is free. For some people, states might charge a small premium. Every state’s Medicaid program is slightly different, but across the board, you have to meet low-income guidelines.
The guidelines vary depending on your age, whether you’re disabled and if you’re pregnant.
In 11 states, you aren’t eligible for Medicaid just because you’re low-income. Sometimes immigrants who legally reside in the U.S. may be eligible for Medicaid, and while it’s not usually available to undocumented immigrants, there are exceptions.
State and federal taxes pay for this program, and the state administers it, which is why the rules are different.
Another option for low-income people is the subsidies talked about above with the ACA.
The law includes tax credits, which are known as premium subsidies. Depending on your situation, you might be eligible for subsidies to offset some or all of the cost of your monthly premiums. Also available are cost-sharing reductions.
Cost-sharing reductions lower the out-of-pocket costs that you might have to otherwise pay when you need care.
If you’re eligible for a tax credit, you can arrange to have it paid on your behalf to your insurer every month. Then you don’t have to claim it all at the same time on your tax return at the end of the year.
What If You’re Self-Employed?
Another situation where you might be wondering how you can get insurance outside of a job is if you’re self-employed.
Self-employed health insurance is something you can buy for yourself and, if applicable, for your family.
Self-employed means you have business income, but you don’t have employees. If you do have employees, you would need to look at insurance plans for small businesses.
Your options for getting insurance as a self-employed person are similar to what’s outlined above.
You might start with the government’s insurance marketplace. Here is where you can learn if you qualify for Medicaid, lower premiums, or tax credits. If you have kids and you’re low-income, you might be able to enroll them in the Children’s Health Insurance Program (CHIP).
Some insurance providers also have plans that are geared toward self-employed people. They might provide decent coverage and an affordable rate. You should talk to an insurance agent because they’re going to have a better idea of what’s available.
There’s another option—health care sharing ministries. These aren’t actually insurance, but rather are an alternative. Groups of people can come together and put their money into a fund. Then, the fund is used to cover major health care costs for other members of the group.
The Association for the Self-Employed is a good organization to get information if you’re not sure where to start as far as getting insurance. When you’re a member, you might also have access to discounted insurance plans.
There is a self-employment tax deduction you can use related to health insurance. If you qualify for the deduction, you can deduct up to 100% of your insurance premiums from your adjusted gross income when you file income taxes.
You do have to remember the deduction is for individuals and dependents, but not for small businesses.
To qualify, you have to show that you have no other forms of coverage. You’ll also have to prove your self-employment income.
Finally, another option for self-employed people was talked about above—you can find a high-deductible plan.
Your premiums will be lower in exchange for the higher deductible. You do have to be careful with high-deductible plans and make sure that you’re setting aside money to cover that amount in a Health Savings Account or in some other way.
If you have a chronic health condition, or you’re older, and you’re more likely to need care, a high-deductible plan might not be the right solution for you.
Overall, people can feel like there aren’t options outside of their employer for insurance coverage, but in reality, there are quite a few things you can explore. If you’re low-income, for example, there’s Medicaid.
If you’re not necessarily low-income, but you are in a situation where you don’t have insurance, there are also solutions available to you.