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Being laid off from your job is scary. No one wants to think it could happen to them, but it’s always best to be prepared.

During the recent Great Recession, which was December 2007 to June 2009, the unemployment rate peaked at over 10%. By the end of the recession, the U.S. unemployment rate was higher than most other industrialized countries. What was especially notable was the number of people who were unemployed for more than 27 weeks (otherwise known as long-term unemployed).

According to a John J. Heldrich Center for Workforce Development at Rutgers University study, nearly 40% of those surveyed said it took more than seven months to find employment and about one in five of laid-off workers said all they could find was a temporary position.

The U.S. lost 2.6 million jobs in 2008 alone.

For some, the Great Recession may seem like ancient history, but for those millions of Americans who lost their jobs, many are still licking their wounds and trying to recover from the blow financially and emotionally.

One question I hear a lot is about how a person can get health insurance when they don't have a traditional job, or a job at all.

 

How to Get Health Insurance after Being Laid Off?

Besides having to find a way to keep food in your belly and a roof over your head, one of the most important tasks after being laid off is sorting out your family’s health insurance.

Employer-sponsored insurance is, by far, the most common source of health coverage in the United States. An estimated 155 million people under age 65 participate in employer-sponsored insurance. It’s important to be prepared if you find yourself without an employer due to a layoff.

An estimated 9.3 million American adults lost health insurance coverage as a result of increased unemployment during the recession of 2007-09, according to a study by researchers at Cornell, Indiana and Carnegie Mellon universities.

In the event of a layoff, making sure you and your family are covered by health insurance should be one of your top priorities. Imagine if you were laid off from your job, losing your employer-provided health insurance, and then having to deal with a major health event. It could be financially devastating. For example, the cost to pay for cancer treatment out of pocket could be tens of thousands of dollars without insurance.

The good news is you have a few choices, ranging from government help to easy 3rd party services like SafetyNet that pays you a lump sum if you get laid off. If you’re curious about your choices, read on!

COBRA

COBRA, the Consolidated Omnibus Budget Reconciliation Act, gives workers and their families who lose their health insurance the right to continue group health benefits offered by their former employers’ group health plan in the event of a layoff. COBRA covers you for a limited time period and with circumstantial limitations.

Even though it is required for your employer to offer COBRA if you had a group health plan, don’t assume COBRA is the best option. Qualified individuals may be required to pay the entire premium for coverage, up to 102 percent of the cost to the plan. This means you have to pay the portion your employer would normally cover. Depending on how much your employer was kicking in before, this could make this insurance unaffordable.

Some employers may give you the option of dropping out of “non-traditional” insurance plans, such as dental and vision coverage, in order to reduce costs.

For more information about COBRA talk to your human resources representative. Or you can call the Employee Benefits Security Administration at 1-866-444-3272 or visit their website at www.dol.gov/ebsa. You can also find a detailed brochure called An Employee’s Guide to Health Benefits Under COBRA.

Affordable Care Act

The Affordable Care Act (ACA) is the comprehensive health care reform law enacted in March 2010. It is also sometimes known as “Obamacare” PPACA.

The website healthcare.gov (also known as the health insurance marketplace) is how many people search for and enroll in health insurance when they don’t have employer-sponsored group health insurance. This is the case for many students, people who work part-time or for small businesses.

Buying insurance through the marketplace is almost inevitably going to be less expensive than COBRA because you will have more options to choose something that fits your budget. In addition, the ACA provides lower cost health insurance options for low-income families.

Keep in mind when shopping for health insurance, the lower premium you pay, typically the less coverage you get and the higher your deductibles will be.

Normally, you need to sign up for health insurance during the Open Enrollment Period, the time when you can enroll or make changes in your coverage without penalties. However, if you do not choose COBRA and never pay any of the premiums for it, the loss of group coverage in the case of being laid off triggers a special enrollment period on your state health insurance marketplace.

To find your state's marketplace website: visit healthcare.gov and select “enroll”, and choose the state where you live or call the 24/7 marketplace helpline 1-800-318-2596.

Short-Term Health Insurance

One option for healthcare coverage between jobs is short-term health insurance, also known as gap insurance or catastrophic health insurance.

Short-term health insurance typically covers major injuries or health events, for example, if you were to get into a car accident. These policies do not meet the minimum essential coverage requirements of the ACA, so they shouldn’t replace standard health insurance, but rather be used only as a temporary solution when no other option is available. In other words, they are better than having no health insurance at all.

You can sign up for short-term health insurance outside the Affordable Care Act’s open enrollment period, which can be helpful in certain circumstances. However, they are very limited and come with many caveats. These plans are typically available in one-month increments of up to 11 or 12 months, although some plans have shorter maximum coverage periods.

The policies tend to require medical underwriting, which means you can be denied coverage due to your medical history (not the case for long-term ACA insurance).

Government Help

When you are laid off from your job, sometimes looking into government programs might be the best option for you and your family. Fortunately, Medicaid and the Children's Health Insurance Program (CHIP) are available for those Americans who are most in need.

Medicaid is a government health insurance program for low-income and disabled people. It covers children, the aged, blind, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments. This program is jointly funded by the federal and state, which means the options and eligibility rules vary from state to state.

Source: http://ift.tt/1zVKkkX Family of 4 in Oregon.

Source: http://ift.tt/1zVKkkX Family of 4 in Wisconsin.

 

According to healthcare.gov, a family of 4 in Oregon, for example, is eligible for free or low-cost coverage through Medicaid if they make under $33,948. But in Wisconsin, that same family is eligible only if they make less than $24,600.

CHIP provides coverage for children, and in some states pregnant women, if your income is too high for Medicaid and you can’t afford private insurance. Like Medicaid, each state program has its own rules about who qualifies for CHIP.  You can apply any time of year to find out if you qualify.

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How to Prepare for the Worst

Unfortunately, paying for health insurance when you have been laid off is always going to be a tough pill to swallow. Health insurance is expensive enough even when you are working full time.

If you still have your job, you may be wondering if there is a way you can insure yourself against a potential layoff. In his 2016 State of the Union Speech, former President Barack Obama mentioned the concept of “wage insurance.”

“Say a hardworking American loses his job — we shouldn’t just make sure he can get unemployment insurance; we should make sure that program encourages him to retrain for a business that’s ready to hire him. If that new job doesn’t pay as much, there should be a system of wage insurance in place so that he can still pay his bills.”

Although the idea of wage insurance through the government is not come to fruition, there is private insurance that can help. Services like SafetyNet™, a Wisconsin-based insurer, offers lump sum cash payouts if you lose your job or can’t work due to illness or injury. With affordable options and extremely easy online application, you can protect yourself and your family against future layoffs. Then, if the worst happens, you’ll have some cash to help pay those health insurance premiums.

Do you have any other tips for someone in this situation?

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