Get the Cheapest Health Insurance When Unemployed

Although there are several ways to get coverage, the most cost-effective option will be with a plan that reduces your health insurance costs based on your income, as ACA marketplace plans do. For example, a health insurance plan for someone who is recently unemployed can cost $47 per month. That assumes the person chooses a cheap Bronze plan and their total income for the year is $35,000, including the parts of the year when employed.

While Medicaid is even cheaper than the ACA marketplace, it's only available for those who meet the income requirements, which can be less than $18,754 for people in many states. If you recently lost your job or your spouse is employed, it will be harder to qualify for Medicaid because other income sources, including unemployment income, are included when determining eligibility.

When shopping for coverage, watch out for short-term health insurance plans and their high deductibles. The cheap prices of these plans are attractive, but before the benefits kick in, you could have to pay thousands of dollars out of pocket for medical care.

5 best health insurance options for the unemployed

For those who are unemployed or recently lost a job, there are five methods for getting a health insurance plan:

Will you qualify for Medicare soon? Medicare is the best medical insurance for those who are over 65 or have a qualifying disability. If you're unemployed and expect to be eligible for Medicare soon, consider how to manage your costs and coverage in the interim. For example, if you only need health insurance for a few months, a short-term insurance policy may be a cheap way to fill the coverage gap.

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How much does health insurance cost without a job?

The cost of health insurance will depend on the type of plan you choose. The cheapest option could be Medicaid, which is free to low-cost, or a plan through the ACA marketplace, which has a variety of coverage options and discounted rates based on income.

Medicaid and CHIP

Benefits include medical care, checkups, hospitalization and prescription drugs. All children have dental coverage with Medicaid or CHIP. For adults with Medicaid, dental benefits vary by state.

Coverage usually begins immediately after you qualify, and most states determine eligibility in real time, so you'll know right away if you qualify.

Medicaid eligibility

Medicaid eligibility is usually based on monthly income, so the sharp drop in earnings after losing a job could make you more likely to qualify.

However, unemployment income is considered when determining if you're eligible for Medicaid. With these benefits typically being about half of your paycheck when you were employed, you can roughly see how your prior income when you were employed could affect Medicaid eligibility when unemployed.

Also, states have different limits on how much you can earn to qualify for Medicaid. If you live in one of the 36 states with expanded Medicaid, you can qualify if your income is less than 138% of the federal poverty line (FPL). For example, that's an individual earning less than $18,754 or a family of four earning less than $38,295.

In Alaska and Hawaii, you can qualify with a higher income because the states have higher FPL amounts and have expanded their Medicaid program. Other states without expanded Medicaid have a lower limit on how much you can earn in order to qualify, and you'll only be eligible if you earn less than 100% of the FPL.

Below are the monthly income limits for Medicaid.

CHIP

If you need coverage for your family but earn too much to qualify for Medicaid, the Children's Health Insurance Program (CHIP) is a public insurance program that provides free or low-cost coverage for children. For example, you could qualify as a family of four earning $50,000 per year. That's $4,167 per month.

Your eligibility for CHIP is automatically determined when you apply for Medicaid or a marketplace insurance plan. And in most states, anyone up to age 19 can be eligible for coverage.

Costs vary by state, but your cost won't be more than 5% of your household income. For example, if your annual income is $40,000, your child's insurance policy won't be more than $167 per month.

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ACA health insurance marketplace

Anyone can get coverage through the marketplace regardless of income, making it useful for those who are recently unemployed or seasonally unemployed. Plus, the amount you'll pay for a plan is based on your expected annual income, which helps to make insurance more affordable.

Often called "Obamacare" plans, health insurance plans on the marketplace are sold by private insurance companies. Plans are grouped into tiers — Catastrophic, Bronze, Silver, Gold and Platinum — making it easier to find the best level of coverage for you. You can also cancel your insurance at any time.

All plans provide comprehensive benefits for medical care, including free preventive care. You can't be charged more because of a medical condition, and you also can't be denied coverage because of a preexisting condition. For children, dental and vision benefits are included, and adults can add on dental coverage.

Cost of ACA marketplace plans

With the health insurance marketplace, the cost of plans will depend on a range of factors including your age, location, household size, the level of coverage you choose and if you qualify for discounted rates because of your income.

For those looking for middle-of-the-road medical benefits, the average cost for a Silver plan is $541 per month if you pay full price. This tier of coverage is best for most people because plans provide a balance between monthly costs and plan benefits.

For those who are young and healthy or who don't need much medical care, choosing a Bronze or lower-tier plan is a good way to save money, but when you do need medical care, you'll pay more out of pocket.

Those who have major or expensive medical needs could get the best deal by choosing a Gold or Platinum plan. These plans will cost more each month, but the better benefits will mean you'll pay less for medical care, helping you save money overall.

Discounts and ways to save

Many people who are unemployed will qualify for ACA marketplace programs to reduce the monthly cost of health insurance and make health care more affordable. The amount you could save is based on your estimated annual income, which may include parts of the year when you were employed.

Your marketplace application will automatically tell you if you qualify.

For an example of how premium tax credits work, the full price of a cheap Bronze plan averages $336 per month, based on the most affordable Bronze plan in each state. After premium tax credits are applied, the cost drops to $47 per month, on average, for someone earning $35,000 per year. That's an 86% discount.

The final amount that you would pay for a health insurance plan varies widely. But the most important thing to remember is that how much you pay for health insurance is discounted based on how much you expect to earn over the entire year. Don't be shocked by seeing a high sticker price at first, before your discounts are applied.

Cheapest health insurance companies

Monthly costs are based on the average cost of a private health insurance plan for a 40-year-old buying a Bronze or Expanded Bronze plan in a state that uses HealthCare.gov as its insurance marketplace.

Timing and how to get coverage

If you lost your health insurance when you lost your job, you qualify for a special enrollment period (SEP) on the ACA marketplace. This lets you sign up for an ACA insurance plan midyear, starting 60 days before you lose coverage and ending 60 days after you lose coverage. If you miss this window, you need to wait for the fall open enrollment to sign up for insurance on the ACA marketplace. In most states, open enrollment starts Nov. 1 and continues through Jan. 15. [/panel]

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Join a family member's plan

If you're unemployed, you may be able to get health insurance coverage through a parent, spouse, domestic partner or another family member. This can be an affordable option because typically an employer will contribute to the cost of the health insurance plan.

Your actual costs will vary based on the plan's benefits and how much the employer contributes to the cost. Usually, if you qualify for medical coverage, you're also eligible for the associated vision or dental plans.

When can you get coverage

Losing health insurance coverage automatically triggers a 30-day special enrollment period (SEP), making it possible to update who is covered by a health insurance plan. This is shorter than the 60-day SEP that's available on the ACA marketplace. However, all employers must offer special enrollment because of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

When you join an employer or group plan, your health insurance coverage will begin on the first of the month after your enrollment.

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Short-term health insurance or indemnity plan

A short-term health insurance plan can be a quick solution for getting health insurance coverage when you're unemployed or have no income.

The affordability of short-term health insurance plans is a major advantage. Plans cost an average of $124 per month. That's cheaper than the full price of an ACA marketplace plan. However, for those who qualify for discounted rates on marketplace plans, a short-term plan will usually be more expensive.

Benefits and coverage

A short-term insurance policy's benefits are usually different from a traditional health insurance policy. That's because short-term plans don't have the same regulations as ACA plans, so they may not cover maternity care, mental health or prescription drugs.

Plans can begin right away, making it a quick way to get coverage. But there is usually a health screening before you can enroll, and you can be denied coverage because of your age or medical conditions such as diabetes, cancer or heart disease. And even if you're able to get a policy with a preexisting condition, short-term insurance may not cover medical treatments for that condition.

Also, most short-term insurance plans have a very high deductible, so enrollees will have to pay for a lot of health care out of pocket before the plan starts contributing to medical care. You may also see some plans with a fixed benefit structure called an indemnity plan where they'll pay a set price for certain medical treatments regardless of how much they cost. For example, if you have an MRI, the plan could pay $250 toward the cost whether the bill totals $300 or $500.

Because of these coverage issues and the variations in plans, it's important to carefully review the plan's benefits and exclusions before enrolling.

Top short-term insurance companies for the unemployed

Availability and length of coverage

Many states have developed their own rules about short-term insurance plans, and access can change by location.

You can't buy short-term health insurance in 11 states and the District of Columbia. Across these locations, either plans aren't permitted or there are no companies selling short-term plans in the state. The states are California, Colorado, Connecticut, Hawaii, Maine, Massachusetts, New Jersey, New Mexico, New York, Rhode Island and Vermont.

The maximum length of a policy also varies by state. The total length of coverage, including renewals, can be as short as three months as in states like Virginia and Washington. Other states like Minnesota allow coverage for up to a year, and in Louisiana, coverage is allowed for a total of 36 months.

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COBRA health insurance

COBRA, short for Consolidated Omnibus Budget Reconciliation Act, is a program that lets you continue the health insurance you had through a job even after you stop working for the employer.

The change in costs is because you'll be paying the full price of the plan rather than splitting the costs with your employer. For example, while you were employed, you may have only been paying $75 per month for a $500 plan because your employer paid $425 as a part of your compensation. By switching to COBRA, someone in this situation would then be responsible for the full $500 cost.

COBRA insurance costs $596 per month, based on the average costs of employer-sponsored health insurance plans.

When should you use COBRA

COBRA is usually not the most cost-effective way to get health insurance. We recommend that you only use it for a few months or in the following situations:

Household coverage and plan types

Children and dependents can also get health insurance coverage through COBRA. You can also use COBRA to continue dental or vision insurance. However, sometimes you can get a better deal by shopping around for a stand-alone dental insurance policy.

Timing of coverage

You'll usually have 60 days to sign up for COBRA after losing coverage through an employer. And typically, you can keep COBRA for at least 18 months. There are no contracts, and you can cancel at any time.

For those considering both COBRA and a marketplace plan, the 60-day cutoff is important. During the first 60 days, both COBRA and the marketplace are options available to you. After 60 days, neither one will be an option, and you will have to wait until the fall open enrollment to sign up for a marketplace plan.

Getting marketplace coverage after COBRA

In most cases, losing health insurance coverage allows you to sign up for a marketplace health insurance plan any time of the year. But there are specific rules when transitioning off of COBRA.

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Frequently asked questions

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Methodology and sources

Data sources include:

Costs are based on a 40-year-old nonsmoker. The cheapest health insurance companies are based on 2023 health insurance plans offered in the 34 states that use HealthCare.gov as their health insurance marketplace. Costs for short-term health insurance policies are for Phoenix.