If you've suffered the blow of losing your job or a significant amount of your income during the COVID-19 pandemic, The American Rescue Plan Act of 2021 (ARPA), may provide you with free health insurance under the Affordable Care Act (Obamacare) this year.
ARPA makes available $1.9 trillion in funds to support those still struggling due to the pandemic. One of its features is the opportunity for no-cost health plans for anyone who receives unemployment benefits for at least one week in 2021. As an alternative, ARPA also opens a window for six months of free COBRA coverage from April through September of 2021.
Here's an overview of current options for health insurance if you are unemployed, plus more information about what might happen if you don't get health coverage. (If you're looking for information about applying or eligibility for unemployment, see our articles on New York unemployment benefits.)
Health Insurance Options for the Unemployed
Marketplace insurance plans. As mentioned above, if you get unemployment benefits for at least one week in 2021, the American Rescue Plan Act guarantees that you can receive a mid-level Obamacare plan for 2021 at no cost to you. This is because the law will disregard any income you earn over 133% of the federal poverty level this year. And that, in turn, locks in the highest level of financial assistance under the Affordable Care Act.
You’ll be able to apply for this benefit through May 15, 2021, if you purchase an insurance plan through NY State of Health. Be prepared to prove that you are receiving or have received unemployment compensation this year. If you get a job, your eligibility will change.
All plans available through the marketplace offer essential medical benefits, including preventive care, emergency services, and prescription drug coverage—and you can't be turned away if you have a pre-existing medical condition.
COBRA. If you’ve been laid off, the Consolidated Omnibus Budget Reconciliation Act (COBRA) usually allows you to keep your employer-sponsored coverage for up to 18 months. This benefit is often prohibitively expensive, however, because you usually have to pay the full premium plus an administrative fee; your former employer contributes nothing.
However, from April through September of 2021, the American Rescue Plan Act provides for 100% free coverage under COBRA for those who have been laid off or subject to a reduction of hours large enough to trigger COBRA eligibility. Speak to your former employer about this benefit; for more information about COBRA, see the U.S. Department of Labor website.
You'll have 60 days to elect COBRA coverage or buy a new health plan through the marketplace. 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 individual insurance plan if you choose to do so.
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 New York's Medicaid or New York CHIP office, or find out whether you are eligible when you fill out an application at NY State of Health.
Your spouse's job-based insurance. If you're married or in a registered domestic partnership, your partner’s job-based insurance plan may be a good option. But some may find that 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 NY State of Health.
Note that if coverage available to you through your spouse’s plan is considered "affordable" under the ACA, but you don’t sign up for it, you won’t qualify for cost-saving subsidies on a marketplace plan. Generally, an employer-sponsored plan is considered "affordable" if the annual cost for employee-only coverage is no more 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.
Other private insurance plans. You may purchase a private health insurance plan outside of the marketplace, either directly from an insurance company or through a broker. If you go this route, compare your options carefully (including a visit to EXCHANGE) to be sure you're getting full coverage at the best available price.
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. Currently, New York does not require health insurance. To find out more about the status of the tax penalty in your state, see Do I Have to Get Obamacare in New York?
To learn more about how much you may have to pay for health insurance, see How Much Does Obamacare Cost in New York?
To find out about cost-saving subsidies, see Ways to Save Money on Obamacare in New York.
If you want to apply for coverage, see How Do I Sign Up for Obamacare in New York?
For information about applying for unemployment, see How Do I Apply for Unemployment Benefits in New York.
To learn whether you qualify for unemployment benefits, see Who Is Eligible for Unemployment Benefits in New York.