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Health Insurance Assistance for the Unemployed

Updated for Tax Year 2015


OVERVIEW

Having health insurance can help lower the financial stress of unemployment. Although finding affordable coverage becomes a challenge when you don't have a job, but options do exist.


Consider the COBRA option

Though it's considered an expensive option, COBRA -- which stands for Consolidated Omnibus Budget Reconciliation Act -- health insurance may also be the easiest to get. Here are some of the key characteristics of a COBRA plan:

  • This program allows you to purchase the coverage you had through your employer by paying the group plan premium plus an administration fee of up to 2 percent.
  • You have 60 days after getting a COBRA letter from the plan administrator to sign up, then another 45 days to pay the first premium.
  • The law requires employers with more than 20 employees to offer COBRA for 18 months to those whose employment was terminated.
  • When COBRA ends, you may be able to convert to an individual policy.

Approach your state insurance department

When your COBRA ends, or you cannot afford the premiums, your state's insurance department may direct you to alternatives, such as:

  • Medicaid
  • Children's Health Insurance Program -- CHIP -- if you have dependents
  • Independent policies
  • Any state-sponsored assistance

CHIP and Medicaid benefits are not included as taxable income. Your state also may keep a list of companies that offer temporary, short-term health coverage, such as those available through college alumni groups, that can tide you over. Opting for a high-deductible, low-premium plan or major medical provision when selecting a temporary or independent plan policy could save you money. An important cost factor to consider, maximum out-of-pocket expense, indicates your overall financial risk should a medical emergency strike.

Shop the Health Insurance Marketplace

You can apply for CHIP and Medicaid on the Healthcare.gov website and immediately learn whether you qualify. If you don’t qualify for either program you can purchase private health insurance through the site and see if any tax credits may be available to help pay your monthly premiums. You can get an advance on any tax credit for which you qualify to buy your insurance right away, rather than wait for the Internal Revenue Service to give you a refund at the end of the year.

The Affordable Care Act imposes penalties on taxpayers who do not acquire health insurance privately or through the Marketplace. However, you may request an exemption from the penalty. An exemption granted because your income cannot support health insurance premiums may qualify you to purchase catastrophic health benefits using the Marketplace.

Not sure if you are exempt from the tax penalty or from the requirement to purchase health insurance? The TurboTax Exemption Check, is a free, online tool to help determine whether you might be eligible to waive the tax penalty entirely and apply for a health care exemption.

Leave no stones unturned

In addition to checking out your industry trade association or school alumni organization about benefit plans they offer, you might ask local churches about any free resources in your community such as clinics. Local universities with medical schools that offer dental, eye care and psychiatric services at reduced costs could also be an option.

Some medical schools and university-affiliated hospitals conduct clinical trials that include free medical care for participants. When you're under age 26, you can stay on a parent's plan; if you're approaching age 65, you can enroll in Medicare within three months of your 65th birthday to get free hospitalization coverage. Using TurboTax can give you peace of mind that no deductions for which you qualify related to your healthcare expenses and job search will be missed.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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