Changes in Income and Health Coverage Eligibility After Job Loss Due to COVID-19

More than 16 million workers have already lost their jobs due to the economic disruption caused by COVID-19, and the numbers will continue to rise as the nation struggles to slow the spread of the virus.  In addition to the severe economic impacts on these workers and their families, the losses of employment and income affect their access to health coverage both through work as well as through the marketplaces and Medicaid.

As we will illustrate in the following scenarios, most people who are laid off and receive Unemployment Insurance (UI) benefits may become eligible for subsidized coverage either through the marketplace or Medicaid.  However, describing how coverage outcomes work is a bit like describing a game of three-dimensional chess.  Post-unemployment health coverage options will depend on (1) the worker’s coverage status prior to being laid off, (2) the unemployed worker’s level of state unemployment insurance (UI) benefits (which are counted in determining eligibility for Medicaid and marketplace subsidies) and federal supplemental UI benefits (which are counted in determining eligibility for marketplace subsidies but not Medicaid), and (3) whether the worker’s state has adopted the Affordable Care Act (ACA) Medicaid expansion option and/or has re-opened its marketplace open enrollment period.

  • For many low-, moderate- and even higher-income families, the income reduction from unemployment can make parents newly eligible for Medicaid if they live in expansion states.
  • In non-expansion states, some unemployed parents whose income falls well below the federal poverty level (FPL) may qualify for Medicaid through the pre-ACA eligibility pathway for parents of dependent children. However, in most non-expansion states, parents must have income well below 50% FPL to qualify,
  • No matter where they live, children in unemployed families will likely be newly eligible for Medicaid or the Children’s Health Insurance Program (CHIP), which is open to children with family income at or well above 200% of FPL in nearly all states.
  • People losing job-based coverage will qualify for a special enrollment period (SEP) in every state marketplace. If their unemployment income is between 100%-400% FPL they can also qualify for subsidies.
  • People who were uninsured while working will not qualify for a SEP based on coverage loss. However, in most state-run marketplaces they will be able to sign up because their state has re-opened enrollment for all residents.
  • People who lose job-based coverage who can sign up for marketplace plans generally will qualify for marketplace subsidies thanks to the $600 per week supplemental federal unemployment benefits, assuming they receive this supplement for most of the temporary period when it is offered.  Over 17 weeks, this supplement adds $10,200 in unemployment income to state UI benefits, and will generally leave individuals and families with income between 100% and 400% FPL.  However, because the federal $600/week supplement ends in July, for lower income families and individuals who lose jobs later in the year, earnings and state UI benefits may not be enough to qualify for marketplace subsidies, and they could find themselves with no affordable options in states that have not expanded Medicaid.
  • Some very low-income uninsured individuals may become newly eligible for marketplace subsidies. Adults with income below poverty generally are not eligible for marketplace subsidies, and generally won’t qualify for Medicaid in non-expansion states (the so-called coverage gap).  However, new federal supplemental UI benefits recently enacted by Congress could lift some poor adults out of the coverage gap, making them newly eligible for Marketplace subsidies. As federal supplemental benefits end in July, this advantage will disappear.

The simplified scenarios shown in this brief do not reflect other variables that could affect health coverage opportunities for individuals.  For example, other state unemployment program characteristics may make unemployed workers eligible for lower state benefits or for a shorter period of time.  Backlogs at some state offices may delay or deter some unemployed workers from applying at all. Limited access to navigators in many federal marketplace states could also make it harder for some people to apply for health coverage options for which they are eligible.

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