Medical Insurance for the Unemployed

Jul 9, 2019

When you lose your job, it’s not just the payslip you worry about. Your medical insurance also becomes one of your biggest stressors. It can be challenging to get coverage when you’re out of work because funds are restrictive. In the meantime, healthcare bills could be piling up for you and your dependents.

Fortunately, you still have several short-term and long-term medical insurance options for protecting yourself in between jobs, including Medicaid and a few other alternatives. Get familiar with these options so that you can choose a type of unemployment health insurance that suits your specific situation and keeps your medical costs manageable while you secure a new position.


If you’re laid off, ask your company if you’re eligible to stay on their medical insurance plan through the federal insurance coverage COBRA.

The law states that if you’re leaving an organization that has more than 20 employees, they’ll need to provide you with medical insurance coverage for at least 1.5 years.

COBRA applies to individuals who involuntarily or deliberately leave their companies, as well as those who remain at work but fail to keep their insurance due to changes in their job hours and other similar factors.

However, you just have a two month (60-day) window to enroll in the COBRA coverage program, so check your eligibility quickly. The advantage of enrolling is that you can continue with your existing medical insurance plan, which means you can visit the same healthcare providers as before.

In some cases, your employer may pay the coverage for a limited period. Hence, it’s critical to have a conversation with your company to know what your insurance options are.

Hospital indemnity insurance

This is a “fixed-coverage” indemnity insurance that can pay for your expenses related to severe illness, surgery and hospitalization. Medical plans may also include additional services such as radiation, chemotherapy, and ambulance, as well as optional perks for ultrasound, preventive care and other healthcare services.

Hospital indemnity insurance is available year round, and you can enroll in it whether or not you have other medical insurance coverage. However, its policies stand separate from the rules of any other insurance you may have.

Generally, the policies created for hospital indemnity insurance offer a particular, fixed-dollar amount for covered durations and medical facilities. The payout will be in line with what’s mentioned in your medical plan, regardless of the incurred expenses of the care you receive. The payout may be per event, per month, per week, or per visit, based on the benefits you’re entitled to.

The downside is that hospital indemnity insurance is a short-term plan, so it’s not compliant with the Affordable Care Act (ACA). Because indemnity plans aren’t required by the law to include the complete scope of cost-free preventive care services, you can be denied coverage if your health history raises red flags for the provider.


The U.S. government has also created a medical insurance stream for the unemployed who aren’t able to buy private coverage. The stream is officially referred to as Medicaid, and it offers medical insurance to those with insufficient salaries.

Unemployed individuals are usually low earners. There may be some exceptions, such as a family where one parent gets laid off but the other is still earning a good salary. For the most part, however, unemployment is serious business.

That said, however, there is more required to qualifying for Medicaid than simply having your finances take a plunge. For example, the unemployed must also meet specific housing requirements in addition to their low-income earnings to be considered for Medicaid coverage. States have also created Medicaid programs (with their own stipulations) that comply with federal policies.

Almost 50 percent of the states have signed contracts with MCOs (managed care organizations) to offer coverage to low-income earners, which comprise about 80% of all people covered. Seniors are most likely to qualify for the standard, fee-for-service Medicaid coverage.

Health Insurance Marketplaces (Health Exchanges)

Under the ACA, the unemployed can also seek medical insurance through a health exchange. These marketplaces are set up to provide individuals with a simple way to get the insurance they need.

As an employed person, you have a variety of rights for medical insurance, including, but not restricted to, these options:

  • Choice of healthcare providers
  • Free preventive care
  • Right to appeal

Also, if you’ve been seeing a particular doctor for a pre-existing ailment, the employer doesn’t have the right to discriminate against you. You can continue seeing the same provider. The healthcare marketplace will also provide you with additional choices, and you’re also protected against company retaliation after you opt for a specific plan through a healthcare exchange.

People usually get coverage through a health exchange during specific enrollment periods. However, if you become unemployed outside of the regular enrollment time, you may still qualify for “special enrollment.” Special enrollment gives you a 2-month window to research and buy a health insurance plan through a government or private health exchange.


The insurance options mentioned above will be your major gateways to getting adequate coverage for the bad times.

When it comes to making the decision, get started early so that you can carefully weigh your choices. If you drag your feet on this, you could end up being insured for a lengthy period, which can be both costly and dangerous.

Another vital reason to enroll in a health plan early is that you will get slapped with a penalty from the federal government if you aren’t insured under a recognizable healthcare plan. While some people might be exempted based on their circumstances (including their salary), this shouldn’t be taken as a reason to remain uninsured for any length of time.

Lastly, whether you’re applying for Medicaid or other medical insurance, have your information ready. Be sure to cite your dependents as well as your monthly income. The provider may also ask you for your tax information, Social Security Number, and details about your former or existing medical insurance plan.

Prepare today by knowing your options for unemployment health insurance. Though your job may feel 100% secure, the future can bring curveballs, and it’s critical to be ready for the sake of your health and your pocketbook.





Being unemployed limits your options to health insurances because you won’t have the capability to pay for its premium. There are four options that you can take advantage of if you are currently unemployed. This includes COBRA, hospital indemnity insurance, Medicaid and Health insurance marketplaces. Know how these insurance policies can help you even if you are unemployed.

4 Medical Insurance Options for the Unemployed [infographic]





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