COBRA starts to bite

COBRA healthcare insurance.
Rabbitti / Shutterstock

For many years, laid-off Americans have been able to temporarily keep their company-provided coverage through a law called COBRA.

It’s a welcome lifeline but an expensive one. You have to pay the same amount you did when you were an employee and foot the bill for the amount the company used to pay.

How much is that? Last year, you would have paid an average of $7,470 for single coverage and $21,340 for family coverage, according to the nonprofit Kaiser Family Foundation.

The deal got a lot better following the mass layoffs during the pandemic. The $1.9 trillion American Rescue Plan saw the federal government pay jobless Americans’ share of the premiums, granting them free coverage for up to six months.

That’s over, as of Sept. 30. Now if you want to keep your past insurance, you’ll pay top dollar — and you can typically only stay on COBRA for a maximum of 18 months.

Your best bet is to start looking for cheaper options right away.

Millions more embrace marketplace plans

Affordable Care Act Plans document.
zimmytws / Shutterstock

If you haven’t already done so, now’s the time to check out the Affordable Care Act marketplace. Anyone who doesn’t want to pony up for COBRA is entitled to a special 60-day enrollment period.

HealthCare.gov is looking more attractive than ever, and Americans are taking advantage. A record-breaking 12.2 million people are now enrolled in federal and state marketplace plans, the federal government announced in September.

If you received unemployment compensation at any time this year — even for just a week — you may be able to snag a zero-premium plan for the next few months.

Though that free coverage will run out in December, the American Rescue Plan is providing broad, reduced-cost coverage at least through 2022.

HealthCare.gov enrollees are now paying no more than 8.5% of their incomes on their health insurance. And the government says about half of new HealthCare.gov users are paying a monthly premium of $10 or less, after tax credits.

Medicaid or marriage may hold an answer

Concept of Medicaid.
Faizzamal /Shutterstock

Another potential solution is Medicaid, which can provide free or low-cost health coverage. No need to watch for an enrollment window: You’re able to apply online at any time of year.

You can qualify based on a combination of your income, disability, family status and household size, but in states that have expanded Medicaid coverage, you can qualify based on your income alone. For a single adult, that cutoff is about $1,482 per month.

States have different rules, but many have made it easier for you to know whether you qualify. Some offer real-time determinations about your eligibility and allow for automated renewals.

Otherwise, if your partner has insurance through their employer, you may be able to piggyback on that plan. And when you do find another job, you can ask whether a group plan is available, though you may have to wait for open enrollment to come around again.

No matter what route you take to find health insurance, now is the time to weigh your options. Once you find affordable coverage, sign up as soon as you can to lock in that plan.

How to pay for your premiums

business accounting with saving money with hand putting coins in jug glass concept financial
lovelyday12 / Shutterstock

If you’re unable to secure free coverage outside COBRA, you’ll have to come up with the cash to pay your premiums — plus all those out-of-pocket costs.

Here are a few ways to free up some extra money:

  • Cut the costs of your other insurance bills. If you haven’t compared quotes recently, you could be drastically overpaying for your coverage. You might save up to $1,000 a year on your car insurance just by shopping around for a better price, and the same move could save you hundreds on home insurance, too.

  • Consolidate — and annihilate — your debt. Credit cards may be convenient, but that comes at the cost of seriously expensive interest. Clear your debt sooner by rolling your balances into a single debt consolidation loan with a lower interest rate.

  • Invest in a brighter future. Hopefully you’ve been investing for a good chunk of your career. But if you’re not drawing a regular paycheck right now, look into an investing app that allows you to invest your "spare change”, turning pennies into a diversified portfolio.

About the Author

Noel Fletcher

Noel Fletcher

Reporter

Noel Fletcher is an insurance and taxes reporter at MoneyWise. Prior to joining the MoneyWise team, Noel wrote for various U.S. and international business magazines, newspapers, syndicates and wire services, including Reuters. For fun, she writes books, takes photographs and enjoys adventure, travel, history and a good cup of coffee.

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