Personal Finance

The 6-month federal health insurance subsidy for jobless Americans is ending. Here's what to do next

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Key Points
  • The government's subsidized health insurance coverage through COBRA will end this month.
  • Here's what you need to know if you were relying on it.
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The federal government's subsidized health insurance coverage for those unemployed during the coronavirus pandemic, facilitated through the Consolidated Omnibus Budget Reconciliation Act, or COBRA, will end this month.

As a result, if you've been using that option, health advocates say now is the time to start thinking about other insurance choices come October.

The $1.9 trillion stimulus package passed in March, dubbed the American Rescue Plan, included a provision that offered many unemployed workers free health insurance coverage through COBRA for six months, starting April 1.

COBRA allows people who leave a company to remain on their workplace insurance plan, but it's usually prohibitively expensive because it requires an individual to cover their own usual share of their monthly premium, plus the part their former employer was paying.

The typical annual premium for job-based coverage in 2020 was $7,470 for individuals and $21,342 for families, according to the Kaiser Family Foundation.

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There was a huge demand for the six-month subsidy, according to experts. After all, more than 16 million people lost their employer-sponsored health insurance during the pandemic, one estimate found.

Those who've been relying on the coverage should get a warning from their former employer or insurer that the subsidy period is ending. In that notice, you'll be able to see what your monthly bill will be without the government's help.

If you find the new premium unaffordable, which may be the case for some, you'll be entitled to a special 60-day enrollment period on the Affordable Care Act's marketplace, said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University's McCourt School of Public Policy. (To avoid a gap in coverage, experts recommend you report your upcoming loss of COBRA coverage as soon as possible.)

If you've been approved for unemployment benefits for a week or more at any point in 2021, you may qualify for a plan with a $0 monthly premium, Corlette said, thanks to beefed up tax credits approved under the American Rescue Plan.

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If your income is low enough, you may qualify for Medicaid.

"It makes sense for anyone who is eligible, given how generous the coverage is," Corlette said.

If you've been rehired at a new company already, you can also speak to your human resources department about getting employer-sponsored health insurance coverage.

However, you may have to wait for this option.

"They may have missed their window to enroll," Corlette said. "The federal special enrollment period only is available for marketplace plans."

You may be able to stay on COBRA if you can afford the premiums, although keep in mind that there's usually an 18-month limit to this option, said Laurel Lucia, director of the health care program at the University of California Berkeley's Center for Labor Research and Education.

The National Patient Advocate Foundation has compiled a guide comparing different health insurance plans. You can also consult with a local health-care "navigator." 

In the meantime, health experts recommend making appointments with your go-to doctors now for any needed or desired treatments, before you start with a new plan next month. That's because your current providers may no longer be covered.