How Obamacare Affects Unemployed California Residents
The difficulties of unemployment are often compounded by the lack or loss of health insurance. But millions of Americans who are currently without both a job and health coverage may find relief under Obamacare. That's because low-cost coverage options may be available to you through Covered California, the health insurance marketplace serving California.
All plans available through the marketplace offer essential medical benefits, including preventive care, emergency services, and prescription drug coverage. You can't be turned away if you have a pre-existing medical condition and, as an unemployed person, you probably qualify for significant cost-saving subsidies.
When you sign up for a marketplace health plan, your coverage can start within a few weeks. Usually, you must sign up during an open enrollment period. But leaving your job and losing job-based health insurance makes you eligible for a special enrollment period. That means you'll have 60 days to sign up for a new health plan.
Here's an overview of your options for health insurance if you are unemployed, plus more information about what might happen if you don't get health coverage. (And if you're looking for information about applying or eligibility for unemployment, see our articles on California unemployment benefits.)
Health Insurance Options for the Unemployed
Your spouse’s job-based insurance. Enrolling in a spouse’s or domestic partner’s job-based insurance plan is a good solution for some. For others, the premium costs are too steep. If coverage through your spouse’s plan is out of reach, you can explore new options for more affordable insurance through Covered California.
If the coverage available to you through your spouse’s plan is considered affordable, but you don’t sign up for it, you won’t qualify for cost-saving subsidies on marketplace plans. Generally, an employer-sponsored plan is considered "affordable" if the annual cost for employee-only coverage is no greater than 9.5% of your annual household income. Healthcare.gov offers guidance and tools to help you determine whether a job-based health insurance plan is considered affordable under the law.
COBRA. If you’ve just left a job, the Consolidated Omnibus Budget Reconciliation Act (COBRA) usually allows you to keep your employer-sponsored coverage for up to 18 months. This benefit is notoriously expensive, however, because you have to pay the full premium plus an administrative fee; your former employer contributes nothing. Before you lock yourself into COBRA coverage, you may want to compare costs with plans offered at Covered California.
You have a special enrollment period of 60 days to elect COBRA coverage or buy a new health plan through the marketplace. If you miss the 60-day deadline, you'll have to wait for the next open enrollment period to buy a marketplace plan. You won't be able to choose COBRA after the 60-day special enrollment period ends.
If you do choose COBRA coverage, you'll get another 60-day special enrollment period after your COBRA coverage ends; this gives you time to switch to an Obamacare plan.
Marketplace insurance plans. As mentioned above, you can go to Covered California to compare features and costs for a variety of insurance plans. Because you are unemployed, you will probably qualify for tax credits to lower your monthly premiums, based on your income and family size. If your income is very low, you may end up paying very little -- or nothing at all -- for coverage. For more information, see the additional resources listed below.
Medicaid and the Children’s Health Insurance Program (CHIP). These government sponsored programs provide free or very low-cost coverage to millions of Americans with limited incomes. You can learn the coverage thresholds and apply for these programs through California's Medicaid or California CHIP office, or find out whether you are eligible when you fill out an application at Covered California.
Other private insurance plans. You may purchase a private health insurance plan directly from an insurance company or through a broker; some of these plans may be available outside of open enrollment periods. This may be an expensive option with limited benefits, so compare your options carefully.
For more information, see Private Plans Outside the Marketplace on Healthcare.gov.
What About the Tax Penalty?
For most people, the tax penalty for going without health insurance disappeared in 2019. But this is not true in a handful of states. If you live in a state that requires you to have health insurance or pay a tax penalty, unemployment may not get you out of that requirement. However, if your income drops below a certain level, you won't have to pay.
To find out more about the status of the tax penalty (and exemptions) in your state, see Do I Have to Get Obamacare in California?
If you do qualify for an exemption, you have to claim it -- either from Covered California or from the IRS when you file your taxes.
To learn more about how much you may have to pay for health insurance, see How Much Does Obamacare Cost in California?
To find out about cost-saving subsidies, see Ways to Save Money on Obamacare in California.
If you want to apply for coverage, see How Do I Sign Up for Obamacare in California?
For information about applying for unemployment, see How Do I Apply for Unemployment Benefits in California.
To learn whether you qualify for unemployment benefits, see Who Is Eligible for Unemployment Benefits in California.
You may also be interested in:
Where to go in California to get health plans under the Affordable Care Act (Obamacare) and how to get help with the application process.
Essential facts about the Affordable Care Act (ACA or Obamacare) in California, including whether you must get health insurance, how much it will cost, and how you can save money.
What sole proprietors and independent contractors in California should know about health insurance under the Affordable Care Act -- also known as the ACA or Obamacare.