Income Changes and Health Insurance
Going through a job loss can be a tremendously stressful experience at any time. It is especially stressful in our present circumstances where seeking employment elsewhere can be risky or impossible given the health dangers that can be found in venturing out and the sheer number of people looking for work. It’s certainly not a stretch to say that this is a difficult time for many people.
In the midst of this worldwide health crisis, many of our friends and neighbors are rightly concerned about how they will financially protect themselves from the high costs of healthcare. Health insurance can play a key role in mitigating some of those costs. The challenge is magnified in the wake of a job loss or a reduction in your work hours and pay. Today we will run through a few tips for navigating how to handle health insurance when your financial situation changes.
If you are covered by an employer and you have lost your job or suffered a reduction in hours that now makes you ineligible for insurance, you have some decisions to make. The good news you also have some time to make them. Typically, many employers will cover you on their plans through the end of the month in which you last worked. This is certainly not universal, so it is prudent to check with your employer to find out what their specific policy is.
If you work for a company with more than 20 employees, you will likely be offered COBRA coverage. This allows you to continue with your company insurance plan for 18 months at your own expense, with a possible extension in some rare circumstances. This can be quite expensive, so it’s a good idea to compare your options. You typically have 63 days to elect COBRA coverage when it is offered, so don’t make that decision hastily. Even if you think you won’t take it, it is wise to keep that door open as a “break glass in case of emergency” type of option – the last resort if something comes up and you need it.
For smaller companies in Oregon, you could enroll in State Continuation Coverage. This looks very similar to COBRA, but is only allowed to be offered for up to nine months. You also have a shorter window of time to elect that coverage and the notification of your opportunity to enroll will come from your insurance company rather than your employer, often several days or even weeks after your lose coverage through your job. Again, I would not rush the decision to enroll or decline coverage, but instead work through your options and compare plans and prices available to you.
You also have options out in the private market for insurance. You have 60 days to enroll in an individual and family plan through your state’s health insurance exchange or directly with the insurance carrier of your choice. If your income will be less than 400% of the Federal Poverty Level, then I strongly encourage you to enroll through the health insurance exchange so that you can access premium tax credits that reduce the cost of your insurance premiums. You will want to keep a copy of any correspondence from your previous employer as you may have to provide documentation that your recently lost insurance coverage. Our office is happy to help you navigate through this process, so give us a call and we can work with you to find the best option for your situation.
For those that are already enrolled in coverage through their state’s health insurance exchange, it is important to update your income information so that the tax credits you receive are appropriate to your situation. If you have had a change in income, report those changes as soon as you can so that you can either receive a greater tax credit or avoid taking too much credit that you might have to repay when you file your taxes.
If your income is reduced below 138% of Federal Poverty Level, you may likely qualify for your state’s Medicaid program. In Oregon, the Medicaid program (Oregon Health Plan) is a no premium, no cost at the point of service plan for those with limited means. Applications for this program should be completed through the state DHS office or on the state’s online application portal.
For a handy tool to determine what program (private insurance, tax credits, or Medicaid) I recommend visiting the Kaiser Family Foundation's calculator at https://www.kff.org/interactive/subsidy-calculator/. It will give you a good indication which program you might want to pursue.
Navigating through job loss and the accompanying decisions that must be made is a complex task. If you find yourself in this situation, know that you are not alone. We are here to help you with those decisions regarding your health insurance coverage and look forward to assisting you. Just give us a call – we’re here for you.
Stay well everyone!