COVID-19, Unemployment, and Health Insurance

| June 15, 2020

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By Erin Bennett

 

The COVID-19 pandemic has had profound impact on employment rates and, consequently, on access to health insurance. In North Carolina, the state unemployment rate exceeded 12% at the end of April and is only expected to rise. According to a recent brief from the Robert Wood Johnson Foundation, nearly 30 million Americans have filed for unemployment benefits through both federal and state support systems since the beginning of March. For individuals and families who were insured through an employer-sponsored plan, lost income is compounded by the loss of health insurance coverage—a particularly critical protection in the current health crisis.[1],[2]

 

Options for those who have lost health coverage vary from state to state based on whether or not the state has chosen to expand Medicaid eligibility under the Affordable Care Act. North Carolina is a non-expansion state, which means that eligibility here remains fairly limited, in spite of some changes that have been made to the program in response to the pandemic.[3] Specifically, the recent House Bill 1043 authorized the use of Medicaid funds to cover the cost of COVID-19 testing for uninsured North Carolinians as long as the federal medical assistance percentage for testing is 100%. (See our series on the content and impact of COVID-19 legislation on schools, hospitals, public health, research, and telehealth in North Carolina.) At this time, there have been no changes made to Medicaid eligibility.

 

One option is exclusive to those who were previously enrolled in an employer-sponsored plan. A COBRA plan allows an individual to temporarily extend his or her insurance benefits after job termination. These plans operate by shifting the payment obligations that were previously held by the employer to the insured person. While these plans are beneficial for those who anticipate temporary unemployment or want to ensure that their individualized health needs remain covered, premiums are often cost-prohibitive, even though cost-sharing arrangements may be more favorable than with marketplace plans. Responding to concerns about the expense of COBRA plans, the recently-proposed HEROES Act contains provisions that would subsidize the cost of COBRA payments for individuals to encourage continuity of care, but no action has yet been taken on the bill.[4]

 

Individuals may also seek insurance coverage on the federally administered marketplace located at healthcare.gov. Generally, new customers can only enroll during the open enrollment period, which typically runs from November 1st until the middle of December in North Carolina. However, certain “qualifying life events,” including job loss, allow individuals to enroll at other times of the year in special enrollment periods. However, there is a 60-day time limitation for individuals to qualify for special enrollment. This means that after you have a qualifying life event, such as losing your job, you only have 60 days to gather necessary paperwork to submit for special enrollment.[5] Within the marketplace, individuals can choose between plans that offer varying levels of coverage. Some plans on the marketplace, deemed “short term health plans,” offer coverage for a smaller premium for a limited time—attributes that may be appealing for those anticipating a return to their jobs in the next few months. However, these plans are often “catastrophic” plans with high deductibles that may not cover many essential services.

 

Individuals may also enroll in Medicaid if they are able to meet the eligibility requirements. North Carolina, one of the 15 states that has not yet expanded Medicaid eligibility under the Affordable Care Act,[6] restricts eligibility to citizens who are adults over age 65[7], young adults and children under the age of 21, pregnant women, blind or disabled persons, families with dependent children, or those in need of long-term care. These populations are then subject to income-based eligibility criteria. For recently unemployed persons who do not fit into any of the age criteria or have a qualifying disability, the only opportunity for Medicaid eligibility arises for those who have dependent children and fit the income requirements.[8] These restrictive eligibility criteria mean that many of the recently unemployed may be unable to afford insurance through the COBRA program or through the marketplace, but may also either make too much or not meet identity criteria for Medicaid eligibility.

 

In recent months, many North Carolinians have found themselves unemployed and facing the loss of health insurance. While opportunities exist for continued coverage through existing programs, these options all have restrictions that may be exclusionary and costs that may not be accessible for those who have experienced substantial loss of income. As policymakers determine assistance for those impacted by COVID-19, they should consider options that address the health insurance needs of those who are recently unemployed.

 

 

 

[1] Prior to the pandemic, approximately 160 million people had employer-sponsored insurance (ESI) nationwide.

[2] The retail and hospitality industries have been particularly hard-hit by the pandemic, but generally do not provide insurance benefits to their hourly workers.

[3] For further reading on COVID-19 response in the Carolinas, see the April and May NCIOM Issue Briefs discussing the crisis. 

[4] The American Recovery and Reinvestment Act created a 65% subsidy for eligible COBRA plans, but the cost of the plans remained prohibitively expensive for many consumers even with the subsidy.

[5] Individuals who are unable to meet the 60-day deadline to qualify for special enrollment due to illness from COVID-19 may qualify for an additional special enrollment period akin to those that have been offered in the past following environmental disaster.

[6] For further reading on this issue in the context of the pandemic, see the recent publication from the North Carolina Justice Center.

[7] These are individuals who are considered “dual eligibles” and are enrolled in Medicare and also meet the financial requirements for Medicaid.

[8] For a family of four, Medicaid income eligibility is generally restricted to those who make $744 or less per month. Families that make more than the income limit may still qualify for Medicaid, with the addition of a deductible obligation