How to get health insurance if you lose your job and those $1,200 checks

On the Blog + Podcast
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Originally published at: https://www.ohmydollar.com/2020/04/01/how-to-get-health-insurance-if-you-lose-your-job-and-those-1200-checks/

Well, we’re throwing out the old schedule and I am just trying to get episodes out as quickly as possible to answer your questions about finances in these times.

Question #1 (at time stamp 2:43)

I have a question… I have insurance thru work, and I think I’m going to have to go on unemployment like half of the world right now. What happens with insurance? If he has already paid it for April am I covered? And then what would I do for may assuming I am still off? I have never used unemployment or not had health insurance they work so I don’t know how any of it works.

Three Health Insurance Options

Option #1 COBRA or State Continuation

You can choose to pay COBRA to keep your same plan, which is more expensive than the exchange insurance usually but it would mean that if you’ve already hit your deductible or out of pocket max, you get to keep the same plan.

This can be a good option if you’re only temporarily laid off and expect to go back within 1-2 months and you can afford it, because it is a pain in the ass to switch insurance a bunch. COBRA is also retroactive, so if you only have a short gap and expect to go back to work, you can just not pay and then pay if you do end up getting hospitalized and needing care.

If you are someone who works for an employer smaller than 20 people, they have to offer you what is called “state continuation” which is where you pay them the full premium directly, but they keep you on the insurance for up to 1 year.

Option #2: Medicaid

If your income on unemployment (not counting the extra $600 a week, which does not count towards it) is low enough to qualify for Medicaid, and your state has expanded medicaid (22 states do not), you then you can get medicaid, which is free or extremely low-cost. This is a great option if you have access to it.

Option #3: Healthcare.gov

The most common option: go onto the state exchanges, and find a plan you can afford with the subsidy. Put in your new unemployment income as your income for subsidy (without that $600 extra). You can find your state exchange by going to healthcare.gov. DO NOT worry about “open enrollment” being over – losing coverage through work is a “life event change” that will qualify you for a special enrollment period.

You will be enrolled on the 1st of the month following your application, which will usually mean you don’t have a gap in coverage. Right now, I’d recommend a lower deductible plan (“silver” or “gold”) simply because the chance of requiring medical is higher for everyone right now, and paying an extra $100-$200 a month is a lot better than owing a $8,000 deductible if you are hospitalized.

Question #2 (at time stamp 13:49)

Hi Lillian!

I’m a relatively new listener to Oh My Dollar, and I have loved spending some of my self-isolation free time backtracking through your old podcast episodes and listening to how compassionate you are when it comes to financial struggles. I’ve recently found out that I’m eligible for a stimulus check from the IRS (among many other Americans!) and I have no idea what that means. Is there a catch? Will I need to pay the money back in next year’s taxes?

I’m one of the lucky people who has a steady job through this pandemic, so I don’t need the money for bills. I’ve seen some sources recommending we spend the money on products or services in order to stimulate the stock market, and I’ve seen other sources saying we should add it to our emergency funds or pay down debt. The only debt I have is low-interest student loans, so I’m not sure how to prioritize. What are your thoughts on how to use this windfall?

Sending positive vibes from Massachusetts! You’re making a difference!
Best,
Christy

 

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Many have questions about how personal finance is rapidly changing in these unprecedented times – it seems like many of the rules are now suspended. So I’ll be answering whatever your questions are about changes to universal credit, unemployment, student loans, health insurance – and if you ask, I will explain what’s going on with the stock and bond markets.

So, please write in your questions to questions@ohmydollar.com or tweet me @anomalily and I’ll try to answer every single question I get in a a few episodes over the next week. I’d also love to just hear just little audio updates about how you’re doing in the world. You can leave a voicemail in the US at (503) 877-4338 or you can email us a voice memo to questions@ohmydollar.com

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Just finished listening, and I was confused by you saying that if our 2020 income is too high we’ll have to pay the stimulus check back. I’ve seen very few people address that question (because it’s one of the least urgent right now) but the N.Y. Times said it wouldn’t need to be paid back. Do you have any source I can check?

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My best guess was by looking at the bill and how the stimulus payment was treated in 2009. the IRS website has not addressed how that situation would be treated, but we see the same thing with the health care subsidies (structured the same way as an advance payment on a future tax credit) and how stimulus payments were treated in 2009 as they were structured the same on the tax code.

So no guarantee they will, but best to be prepared if you are in that situation. No one is certain but we are going off how the tax code is written.

NYtimes read the structure of the credit same as me “ What if my recent income made me ineligible, but I anticipate being eligible because of a loss of income in 2020? Do I get a payment?

The plan does not help people in that circumstance now, but you may benefit once you file your 2020 taxes. That’s because the payment is technically an advance on a tax credit that is available for the entire year. So it will depend on how much you earn.”

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You’re right NYT wasn’t the one I was thinking. I found one article that said it wouldn’t have to be paid back, but of course no citation.

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I’m hopeful it isn’t true; the CARES act is hastily written and they will DEFINITELY be issuing amendments to make it legally binding at some point as they find places where they screwed up - the IRS doesn’t even have a form for submitting your ACH information - so there’s a possibility that it won’t be counted that way. It’s my best guess. I’d rather people be prepared to pay it back than the other way around.

I’ll definitely update the show with a correction if there’s a change or official word from the IRS on how excess advance credit is handled.

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Is it safe to assume that the IRS has my ACH information if they took money from me for taxes for 2018 and 2019? It’s been a few years since I’ve actually had a refund, as I’ve had income not withheld or underwithheld due to negligence and 1099s. I filed via H&R Block, and I didn’t pay too much attention and basically just filled out whatever they told me to…

Also, great episode! I find informational updates from people I like and trust comforting right now, even when it’s either information not directly relevant to me or bad news, haha.

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As safe as it is to assume anything, I would say yes.

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Lol, fair enough. Uncertainty all around. And thank you, I assumed as much immediately, then started second guessing myself!

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Boyfriend’s insurance runs out April 30 and my state is so backed up that I fear he will not be told what his unemployment income is by then - and thus will be unable to get on Obamacare.
Should we just put him on Cobra if that happens and immediately cancel as soon as IL coughs up what his unemployment amount is?

I know it’s only been a week and it’s taking several weeks for people to hear back in IL, I’m told. I’m just getting nervous about the insurance, as is he.

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He can enroll in Obamacare without having his specific unemployment amount. Just calculate out what the UI amount would be without the extra $600 (he has a pretty cut and dry situation since he is w2) and then just input that for the wage amount on an annualized basis. No need to have the UI check in hand, they don’t ask for wage verification.

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Thank you - we’ve been having a hard time getting the unemployment site to load (where I know there is a table showing the amount based on earnings). But that info must be somewhere else too. This is great to know.

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I work for a COBRA administrator and wanted to point out a few things that weren’t quite accurate in the podcast in hopes it helps people make an informed decision!

  1. COBRA is retroactive but you don’t have infinite time to elect. You only have 60 days from the date your notice was mailed or your first day of COBRA which ever is later. You then have 45 days to pay your account current. This does mean you could elect coverage on day 60 and wait to make payment until you know you need coverage. This gives you a bit more time to decide if you need coverage.

  2. Federal COBRA coverage is generally for a maximum of 18 months. There are a few instances where it can be extended.

  3. COBRA costs 102% of the full premiums. So if you plus your employer pay $400 for coverage as an employee your COBRA cost would be $408.

If anyone has more questions I would be happy to answer!!

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Very helpful additions, @gardeningandgreen! Especially as far as the 60 days to opt in. That’s why it can be helpful if it’s only a short gap in coverage expected.

One thing to know about the 102%, which I believe I mentioned in the podcast, is that the federal subsidies don’t work for COBRA - so in most cases, you will end up paying a lot less if you qualify for subsidies on the exchange, but not always (depending on your employer plan + family size).

But many folks at smaller companies pay close to the full cost per month for their health insurance (very small employer contribution), in which case the cost might not jump much at all.

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Another thing to note with the cost is that a lot of companies right now especially larger ones are paying for all or a portion of COBRA premiums. Which could make it a really great option if it is likely that you will return to work before the period they are paying for premiums runs out.

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Ohh that is good to know. I didn’t know legally they could do that with cobra.

(I have only once had an employer sponsored plan, definitely not @ a large company so my biases are showing.)

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To update this if anyone is considering COBRA there was just an update this week. The DOL and IRS have decided to allow anyone who is offered COBRA 60 days from the end of the COVID-19 outbreak to make their COBRA elections and 30 days from the end of the outbreak to make payments. This is for anyone offered after March first or with payments due after March 1st.

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THANK YOU SO MUCH FOR THE INFO. I will try to get this out on the show.

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