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UNEMPLOYED DUE TO COVID-19? HERE’S HOW THAT AFFECTS MEDICAL BENEFITS

Unemployed Due to Covid-19? Here’s How That Affects Medical Benefits

Apr 24, 2020

 - Updated

Nov 8, 2024

Key Takeaways:

COVID created a wave of unemployment across the US.
Job loss usually cause people to lose health insurance as well.
Protect yourself with COBRA, Medicaid or subsidized plans from the Affordable Care Act marketplace.

Get on a family member’s plan
Look into Medicaid
Use the Affordable Care Act marketplace
Consider COBRA
Don’t leave yourself uninsured
Keep your finances healthy too

The coronavirus pandemic has led 6.6 million people to file for unemployment. If you’re one of these people, you may be wondering what will happen to your health insurance coverage. The bad news is that your employer-sponsored health benefits probably won’t come with you when you lose your job. The good news is that you have a number of options to get the health insurance you need. Here’s what you can do if you’ve lost your job and medical coverage due to the pandemic.

Get on a family member’s plan

If your spouse is still working and has an employer-sponsored health insurance plan, find out if you can add yourself to their plan. Keep in mind that if you go this route, you have 30 days from the time your former employer stops paying for your coverage to enroll in your family member’s plan. In the event you’re under 26, the Affordable Care Act will allow you to receive coverage under your parents’ health insurance.

Look into Medicaid

Medicaid is a great option that offers low-cost, comprehensive healthcare benefits. If you think you don’t qualify for Medicaid, do some research — you may now be eligible. Fortunately, 36 states and the District of Columbia have expanded Medicaid coverage. If you live in one of these states or D.C., and earn up to 138% of the federal poverty level, you may sign up for it. The federal poverty level is:

$17,609 for individuals
$23,792 for a family of two
$36,156 for a family of four

Use the Affordable Care Act marketplace

The Affordable Care Act Marketplace is a federal website you can use to browse a variety of affordable health insurance plans, compare them, and make a purchase. It may be an option if you’re not eligible for a family member’s plan or Medicaid.

If your expected income for 2020 falls between 100% and 400% of the federal poverty level, you may be able to lock in the Premium Tax Credit. Essentially, the Premium Tax Credit is a subsidy that can help make your health insurance premiums through the marketplace more affordable. You may qualify if your income falls within these ranges.

$12,490 to $49,960 for individuals
$16,910 to $67,640 for a family of two
$25,750 to $103,000 for a family of four

It’s important to note that most states depend on the Affordable Care Act Marketplace to help their residents find coverage. However, if you live in the District of Columbia or one of 12 states that has their own marketplace, you’ll need to use that option instead. Here are the websites for these marketplaces.

Consider COBRA

Through the Consolidated Omnibus Budget Reconciliation Act (COBRA), you may be able to keep your health insurance benefits when you lose your job. While COBRA may be a fine choice, it’s essential to understand a few things before you commit to it.

Coverage doesn’t last forever: In most cases, you can stay on COBRA for up to 18 months, as long as you make your monthly premium payments. So once the COBRA period is up, you’ll have to find an alternative way to receive coverage.
COBRA is expensive: When you receive health insurance benefits through your employer, all you have to pay for is part of a premium that’s usually deducted from your paycheck. With COBRA, however, you’re responsible for the entire premium. In addition, you’ll have to pay a 2% administrative fee.

Don’t leave yourself uninsured

While it may be tempting to go without health insurance for a while in order to save some cash, doing so is a risky move. Even if you consider yourself a healthy individual, you’re still at risk for the coronavirus or another condition that may require costly medications and doctor visits. By securing health insurance shortly after you lose your job, you can save yourself from thousands of dollars in possible medical debt and achieve some much needed peace of mind.

Keep your finances healthy too

Learning how to deal with debt, money, and unexpected financial road blocks such as lost health insurance coverage doesn’t need to be hard. Here at Freedom Debt Relief, we’ve created a simple to follow guide to help you find the tools you need to manage your debt and create a better financial future. Get started by downloading our free guide right now.

Learn More

Coronavirus Stimulus Package: What it Means For You (Freedom Debt Relief)
3 Smart Ways to Spend Your Stimulus Check (Freedom Debt Relief)
Need to Skip a Loan Payment Because of COVID-19? Talk to Your Lender Now (Freedom Debt Relief)
Medicaid Program (Benefits.Gov)
COBRA Coverage and the Marketplace (HealthCare.Gov)

Debt relief by the numbers

We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during September 2024. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.

Credit utilization and debt relief

How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In September 2024, people seeking debt relief had an average of 83% credit utilization.

Here are some interesting numbers:

Credit utilization bucket	Percent of debt relief seekers
Over utilized	30%
Very high	32%
High	19%
Medium	10%
Low	9%

The statistics refer to people who had a credit card balance greater than $0.

You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.

Credit card debt - average debt by selected states.

According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average credit card debt for those with a balance was $6,021. The percentage of families with credit card debt was 45%. (Note: It used 2022 data).

Unsurprisingly, the level of credit card debt among those seeking debt relief was much higher. According to September 2024 data, 88% of the debt relief seekers had a credit card balance. The average credit card balance was $15,142.

Here's a quick look at the top five states based on average credit card balance.

State	Average credit card balance	Average # of open credit card tradelines	Average credit limit	Average Credit Utilization
Alaska	$18,493	7	$24,102	89%
Connecticut	$18,231	9	$28,791	94%
New Jersey	$18,127	9	$27,261	91%
Minnesota	$17,744	8	$25,731	82%
New Hampshire	$17,333	8	$26,156	92%

The statistics are based on all debt relief seekers with a credit card balance over $0.

Are you starting to navigate your finances? Or planning for your retirement? These insights can help you make informed choices. They can help you work toward financial stability and security.

Regain Financial Freedom

Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.

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