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Here's how to find health-care coverage if you've lost your job

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Jose Luis Pelaez

A staggering 36.5 million Americans have lost their jobs since the coronavirus pandemic prompted many cities and states around the country to order Americans to shelter in place in an attempt to mitigate the public health effects of the virus. 

Yet unemployment during a health crisis can be especially challenging in the U.S. since about 49% of Americans get health insurance through their employer. As many as 16.2 million workers are at risk of losing their employer-provided health insurance in the middle of a national health crisis, according to the latest estimates from the Economic Policy Institute

In fact, it's particularly important to have health insurance now because almost all health-care plans, as well as Medicare and Medicaid, are currently waiving co-pays, deductibles and out-of-pocket costs for testing for coronavirus. Additionally, many insurers are waiving fees for telemedicine services and some are even covering various treatment options for coronavirus.

All of these additional benefits may be out of reach for those without health insurance, and the costs can add up. Testing alone can add up to about $1,300, while the cost of hospitalization and treatment for more severe cases of Covid-19 can cost almost $75,000 if you're uninsured.  

"You really should make sure you have health insurance now," says Hanna Horvath, data analyst and personal finance expert for Policygenius. But for many, that's easier said than done, especially if you're unemployed as a result of the coronavirus outbreak. 

If you have lost your job already and received some sort of severance, carefully read through your exit package to see if additional coverage is offered, Horvath says. If you're not sure, take time to talk with your HR rep. "All things considered, they will be happy to help you navigate your benefits," Horvath says. 

For most Americans, there's generally two paths to get health insurance if you've been recently let go from your job. Here's a look at the options. 

COBRA coverage 

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a program that extends your current health insurance plan for up to 18 months after you lose your job. 

Typically employers with at least 20 full-time employees are required to offer COBRA coverage, and it's generally available to former employees and retirees, as well as their spouses, former spouses and dependent children if they were originally covered. Some states have expanded coverage, so if you're not sure, ask your HR rep, or reach out to your state's labor office

From a coverage standpoint, nothing would really change if you opt into this health insurance, Horvath says. You'd continue on the same health plan as before, with the same benefits.  

Yet from a cost perspective, this can be an expensive option. That's because before, your employer was paying for a portion of the plan. But after your employment ends, you're paying for the entirety of the plan, plus a 2% administrative fee. 

The average annual premium cost for employer-sponsored health insurance was $6,896 for an individual and $19,616 for a family in 2018, according to the Kaiser Family Foundation. But employers cover an average of 82% of the costs for individuals and 71% for families.

With COBRA, you're liable for the total cost of the plan. So while this may be a convenient option, most Americans should expect their payments to "dramatically increase," Horvath says.

Typically you have about 60 days to enroll once you receive the COBRA notice. If you initially waive coverage, but then find you need it, you can still enroll as long as you're within the 60-day window. Keep in mind, however, once you opt into COBRA, you cannot switch to a plan through a health insurance marketplace until open enrollment begins in November or until COBRA ends in 18 months. 

Plans through health insurance marketplace

If COBRA proves too expensive, you can also check out your state's health insurance marketplace options. Losing job-based health insurance coverage, even if you quit or get fired, qualifies you for a special enrollment period.

The national average premium for a silver level, or benchmark, marketplace plan in 2020 is $462 a month, according to the Kaiser Family Foundation. However, that does not include any subsidies, which about 87% of Americans are eligible to receive. 

You have about two months, 60 days, after you lose coverage to enroll in a marketplace plan. Keep in mind that coverage may not start immediately. Marketplace plans go into effect the first day of the month after your job ends, so if you were laid off this week and you pick a Marketplace plan by the end of March, your coverage would start April 1. 

Other options for health coverage

Because losing your health insurance coverage is a qualifying event, you can also look into joining a spouse, partner or family member's employee-sponsored plan. If you're under 26, you may even be able to join your parents' employer-based plan. You have 30 days from the time your previous employer stops paying for your insurance to enroll in your family member's plan. 

Additionally, depending on your situation and where you live, you may qualify for Medicaid. This is a program that provides health coverage for low-income families and children, pregnant women, the elderly and people with disabilities. 

In some states, Medicaid is available for all adults under a certain income threshold, but you'll need to check with your state. Healthcare.gov has a calculator where you can plug in your home state, family size and income level to use to see if you qualify. 

But be very careful if you're looking to buy your own insurance and considering short-term health plans. While these plans are designed to be an affordable stop-gap measure, many lack essential coverage and may not include coronavirus coverage.

Osmel Martinez Azcue received a bill for $3,270 earlier this year after he went to the emergency room when he worried he had coronavirus after returning from a trip to China, the Miami Herald reported. Yet coverage for a portion of those costs would not kick in under his limited health insurance plan until he provided three years of medical records to National General Insurance to prove he didn't have an underlying condition. 

"Short-term health plans can be an alternative to traditional health insurance plans, but they aren't regulated by health-care marketplace, so they don't offer a lot of benefits," Horvath says, and that can exclude preventative and maternity care. "There are a lot of out-of-pocket costs you may end up paying," she adds. If you are considering this type of plan, read through the plan's coverage very carefully. 

It's worth noting that short-term health plans are different from catastrophic health plans, which are for people under age 30 and usually have low monthly premiums but very high deductibles. With these plans, you have to pay the entire deductible — $8,150 for Marketplace catastrophic plans in 2020 — before the plan will kick in anything toward essential care outside three primary care visits per year. 

While this option might work for some Americans, catastrophic health plans may not be great choice to get in the middle of a health crisis after losing your job, Carolyn McClanahan, a Florida-based financial planner and physician, tells CNBC Make It. "I would recommend getting a plan that has a deductible you can afford."  

Consumers should also be leery of paying into health-care sharing ministries for coverage. Billed as alternatives to health insurance and typically offered by Christian nonprofit groups, these programs do offer lower rates, but are not classified as insurance and are under no legal obligation to pay your coverage claims. 

In fact, California's insurance regulator recently barred ministry plan operator Trinity HealthShare and Aliera, which markets the plans, from doing business in the state, saying the two companies used deceptive marketing tactics to mislead consumers.  

"It's a very turbulent time for people and I know it's easier-said-than done to approach things with a level head, but understand that with health insurance, there are options," Horvath says. "Doing your due diligence and seeing what's out there will, one, save you money and two, give you more coverage than you think you may get."

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